This English translation is provided for information purposes only. If any discrepancy is identified between thistranslation and the Japanese original, the Japanese original shall prevail.
August 22, 2019

Midterm Financial Report for the Fiscal Year Ending December 31, 2019
(January 1, 2019 – June 30, 2019)Japan Hotel REIT Investment Corporation
Listing:
Securities code:
URL:
Representative:

Tokyo Stock Exchange8985
http://www.jhrth.co.jp/en/
Kaname Masuda, Executive Director

Asset Management Company:
Representative:
Contact:

Japan Hotel REIT Advisors Co., Ltd.
Hisashi Furukawa, Representative Director and President
Noboru Itabashi, Director and Senior General Manager of Operations Division
Phone: +81-3-6422-0530

Scheduled date to file midterm Securities Report:

September 18, 2019

Preparation of supplementary material on midterm financial report:
Schedule for presentation of midterm financial results:

Yes
Yes (Institutional investors and analysts only)(Amounts are rounded down to the nearest million yen)

1. Status summary of operation and assets for the midterm of the fiscal year ending December 31, 2019
(January 1, 2019 – June 30, 2019)(1) Operating results(Percentages: full year—changes from the previous year, midterm period—changes from the previous midterm period)

Midterm period ended
June 30, 2019
June 30, 2018
Fiscal year ended
December 31, 2018

Midterm period ended
June 30, 2019
June 30, 2018
Fiscal year ended
December 31, 2018

Operating revenue
JPY1M%
12,7193.2
12,321
9.3
28,253

10.9

Operating income
JPY1M
%
7,293
(0.4)
7,319
8.6
17,993

14.2

Ordinary income
JPY1M
%
6,354
(0.5)
6,387
7.3
16,211

15.7

Net income
JPY1M
6,353
6,387

%
(0.5)
7.3

16,21015.7

Net income per unit
JPY
1,441
1,592
4,041

(Note) Net income per unit is calculated based on the period-average number of investment units issued.

(2) Financial position
Midterm period ended
June 30, 2019
June 30, 2018
Fiscal year ended
December 31, 2018

Total assets
JPY1M
406,018
343,603

Net assets

350,556

JPY1M
227,021
193,731

Equity ratio
%
55.9
56.4

Net assets per unit
JPY
50,87448,301

203,372

58.0

50,705(Note) Net assets per unit are calculated based on the total number of investment units issued and outstanding at the end of the midterm period / full year.

－

1 －(3) Cash flows

Midterm period ended
June 30, 2019
June 30, 2018
Fiscal year ended
December 31, 2018

Cash flows fromoperating activities
JPY1M
8,368
9,103

Cash flows frominvesting activities
JPY1M(70,001)(1,435)30,938(3,110)Cash flows from
Cash and cash equivalents
financing activities
at end of period/year
JPY1M
JPY1M
49,26024,811(14,164)
21,422(18,563)

37,184

2. Operating forecast for the fiscal year ending December 31, 2019
(January 1, 2019 – December 31, 2019)(Percentages show changes from the previous year)
Operating revenue
JPY1M

Full year

28,666%
1.5

Operating income
JPY1M

17,227%(4.3)

Ordinary income
JPY1M

15,274%(5.8)

Dividend per unit
(Excess of earnings
exclusive)

Net income
JPY1M

15,273%(5.8)

Dividend per unit
resulting fromexcess of earnings

JPY
3,686

JPY

－

(Reference) Estimated net income per unit for the fiscal year ending December 31, 2019 (full year) ¥3,444(Note)(Calculated based on the estimate of period-average number of investment units of 4,434,849.)
The source of the dividend payment is planned to be the total amount of net income, plus the reversed amount of the reserve for temporary difference
adjustment (¥1,177 million).

* Other(1) Changes in accounting policies, changes in accounting estimates, and restatement of financial statements for prior period after
error corrections(a) Changes in accounting policies due to revisions to accounting standards and other regulations: No change(b) Changes in accounting policies due to other reasons than above (a): No change(c) Changes in accounting estimates: No change(d) Restatement of financial statements for prior period after error corrections: No change(2) Total number of investment units issued and outstanding(a) Total number of investment units issued and outstanding at the end of the midterm period / full year(including investment units owned by Japan Hotel REIT Investment Corporation (hereinafter referred to as “JHR”))
As of June 30, 2019
4,462,347 units
As of June 30, 2018

4,010,847 units

As of December 31, 2018(b) Number of JHR’s own investment units held at the end of the midterm period / full year
As of June 30, 2019

4,010,847 units
0 units

As of June 30, 2018

0 units

As of December 31, 2018

0 units(Note) For the number of investment units serving as the basis of computation of net income per unit, please refer to “Notes on per unit information” on page 35.

* Status of midterm audit procedures
At the time of disclosure of this midterm financial report, audit procedures for the semi-annual financial statements pursuant to the
Financial Instruments and Exchange Act of Japan are incomplete.

* Appropriate use of forecasts of results and other special items
Forward-looking statements presented in this midterm financial report including operating forecasts are based on information
currently available to us and on certain assumptions we deem to be reasonable. As such, actual operating and other results may
differ materially from these forecasts due to a number of factors. Furthermore, we do not intend to guarantee any dividend amountby this forecast. For the assumptions of the operating forecast and notes for the use of operating forecast, please refer to “1.
Operating results; (1) Operating results; (B) Outlook for the second half of the fiscal year” on page 6 and “Assumptions of theoperating forecast for the full year of the fiscal year ending December 31, 2019 (20th period)” on page 10.

－

2 －○Table of Contents
1. Operating results................................................................................................................................................................................... 4(1) Operating results ........................................................................................................................................................................... 4
2. Semi-annual financial statements ....................................................................................................................................................... 20(1) Semi-annual balance sheets ........................................................................................................................................................ 20(2) Semi-annual statements of income ............................................................................................................................................. 22(3) Semi-annual statements of changes in net assets ........................................................................................................................ 23(4) Semi-annual statements of cash flows ........................................................................................................................................ 25(5) Notes on going concern assumption ........................................................................................................................................... 26(6) Notes on matters concerning significant accounting policies ..................................................................................................... 26(7) Note on change in the indication method .................................................................................................................................... 27(8) Notes to semi-annual financial statements .................................................................................................................................. 27(9) Changes in total number of investment units issued and outstanding ......................................................................................... 36
3. Reference information ......................................................................................................................................................................... 37(1) Information on values of assets under management, etc. ............................................................................................................... 37
A. Investment status ............................................................................................................................................................................ 37
B. Assets under management ............................................................................................................................................................... 39(2) Status of capital expenditures ........................................................................................................................................................ 52－

3 －1. Operating results(1) Operating results(A) Overview of the midterm period under review(a) Brief history and principal activities
Japan Hotel REIT Investment Corporation (JHR) was established under the Act on Investment Trusts and Investment
Corporations (Act No. 198 of 1951, as amended; hereinafter referred to as the “Investment Trusts Act”) on November 10,2005 and was listed on the Real Estate Investment Trust (REIT) section of the Tokyo Stock Exchange (Securities code:8985) on June 14, 2006.
JHR entrusts the asset management to Japan Hotel REIT Advisors Co., Ltd. (hereinafter referred to as the “AssetManagement Company”). Focusing on importance as social infrastructure and profitability as investment real estate of
hotels, JHR primarily invests in real estate which are wholly or partially used as hotels or real estate equivalents of such
real estate or related assets that are backed by such real estate or real estate equivalents (hereinafter referred to as “RealEstate for Hotels, etc.”).
JHR, the former Nippon Hotel Fund Investment Corporation, merged with Japan Hotel and Resort, Inc. with an effective
date of April 1, 2012 (hereinafter referred to as the “Merger”) and changed its name to Japan Hotel REIT Investment
Corporation. Since the Merger, JHR has carried out nine public offerings for capital increase and continuously acquired“highly-competitive hotels” in mainly “strategic investment areas” where domestic and inbound leisure demand can be
expected over the medium to long term.
By implementing the aforementioned growth strategy, JHR has expanded its asset size while improving the quality of its
portfolio through new property acquisitions of 26 properties amounting to ¥275,160 million (acquisition price basis) intotal in the little more than seven years since the Merger to the end of the midterm period under review (June 30, 2019). As
a result, JHR had a portfolio of 43 properties with a combined acquisition price of ¥374,508 million, and the total numberof investment units issued and outstanding stood at 4,462,347 units at the end of the midterm period under review.
(b) Investment performance for midterm period under review
During the midterm period under review (six-month period from January 1, 2019 to June 30, 2019), the domestic
accommodation market and tourism market have remained strong although the impact of the future course of trade issues
on the world economy requires careful attention. During the said period, the cumulative number of overnight guests atdomestic accommodation facilities totaled 261.7 million guest nights (preliminary release), indicating solidness in theaccommodation market. Furthermore, the number of foreign visitors to Japan (hereinafter referred to as “inbound”) was
estimated 16.6 million (up 4.6% from the same period in the previous year) during the period, marking a record high for theJanuary to June period.
The hotel investment market continued to be in a brisk state against the backdrop of the expected growth in demand foraccommodation, with continual attention paid to Japan’s tourism industry and hotel industry. JHR has continuously
expanded its asset size capitalizing on the strengths such as high recognition as Japan's largest J-REIT specializing in hotels,
capability to propose various acquisition schemes and cooperation with Hotel Management Japan Co., Ltd. (hereinafterreferred to as “HMJ”), a group company.
During the midterm period under review (six-month period from January 1, 2019 to June 30, 2019), JHR acquired Hilton
Tokyo Odaiba (acquisition price: ¥62,400 million), a scarce large-scale full-service hotel positioned as JHR’s flagshipproperty; and Hotel Oriental Express Osaka Shinsaibashi (acquisition price: ¥2,738 million), a hotel which HMJ has been
involved with since the beginning of development and has managed utilizing its market knowledge and operational knowhow since the opening. Amid some overheated mood in the hotel investment market, JHR improved the portfolio quality
through acquisitions that leveraged its strengths of proposing and executing various acquisition schemes for acquisitions.
The performance of hotels owned by JHR mostly remained solid in Tokyo, Hiroshima, Fukuoka, etc. However, RevPAR(Note 2) and GOP (gross operating profit) of the 21 hotels with variable rent, etc. (Note 1) fell slightly below the same
period of the previous year due to the impact of the increase in new hotel supplies in the Kansai region, etc.
While taking measures to increase fixed and variable rent, etc. through the active asset management strategy, which is the－

4 －aggressive and proactive pursuit of greater profitability and asset value of owned hotels, JHR will endeavor to generate
greater earnings by reducing the costs of each item such as real estate operating costs, general and administrative expenses
and borrowing costs through negotiations with relevant parties and other measures. For further details of sales, GOP andother management indicators for the 21 hotels with variable rent, etc., please refer to “<Reference Information 3> Hotel
operation indexes, sales and GOP” on page 17.
(Note 1)

The hotel group combining the hotels which JHR leases to HMJ (Kobe Meriken Park Oriental Hotel, Oriental Hotel tokyo bay, Namba
Oriental Hotel, Hotel Nikko Alivila and Oriental Hotel Hiroshima, (hereinafter referred to as the “Five HMJ hotels”)), with the hotels
which JHR leases to HMJ subsidiaries (Okinawa Marriott Resort & Spa, Sheraton Grand Hiroshima Hotel (main facility of ACTIVEINTER CITY HIROSHIMA), Oriental Hotel Fukuoka Hakata Station, Holiday Inn Osaka Namba, Hilton Tokyo Narita Airport,
International Garden Hotel Narita, Hotel Nikko Nara, Hotel Oriental Express Osaka Shinsaibashi and Hilton Tokyo Odaiba) is called
the HMJ Group Hotels. The 21 hotels with variable rent, etc. refers to the HMJ Group Hotels excluding Oriental Hotel Fukuoka Hakata
Station, Hotel Oriental Express Osaka Shinsaibashi and Hilton Tokyo Odaiba (hotels for which comparison with previous period is notpossible due to renovation or new acquisition) plus ibis Tokyo Shinjuku, ibis Styles Kyoto Station, ibis Styles Sapporo, Mercure
Sapporo, Mercure Okinawa Naha, Mercure Yokosuka, the b suidobashi, the b ikebukuro, the b hachioji and the b hakata. The same shallapply hereinafter.

(Note 2)

RevPAR represents revenue per available room, which is calculated by dividing revenue for rooms department for a certain period(including service charge) by the total number of rooms available for sale during the period. Revenue per available room is the productof ADR and occupancy rate. ADR represents average daily rate, which is calculated by dividing revenue for rooms department for agiven period (including service charges) by the total number of rooms sold during the period.

(c) Funding status
During the midterm period under review (six-month period from January 1, 2019 to June 30, 2019), JHR took out loans of¥30,000 million in total in April 2019, in addition to procuring ¥33,378 million by way of capital increase through public
offering in January 2019 and third-party allotment in February 2019; and acquired two properties, Hotel Oriental Express
Osaka Shinsaibashi and Hilton Tokyo Odaiba in February and April 2019, respectively.
In March 2019, JHR took out loans of ¥6,000 million in total mainly to refinance investment corporation bonds that had
matured and borrowings that were due for repayment. Furthermore, JHR took out loans of ¥1,800 million mainly forrenovation of Oriental Hotel Fukuoka Hakata Station (formerly Hotel Centraza Hakata) (Note 1). In addition, JHR issued
investment corporation bonds of ¥8,000 million for individual investors in June 2019 and allocated the funds to the
prepayment of existing loans.
Consequently, as of the end of the midterm period under review, balance of interest-bearing debt totaled ¥168,371 million,
including short-term loans payable of ¥900 million, current portion of long-term loans payable of ¥13,709 million, longterm loans payable of ¥114,162 million and investment corporation bonds of ¥39,600 million, and the ratio of interestbearing debt to total assets at end of the midterm period (Note 2) stood at 41.5%.
JHR reduced borrowing costs and extended maturity dates through the aforementioned series of fund procurement. Alongwith such, JHR concluded loans with fixed interest rates as well as interest rate swap contracts (except for some short-termloans) to hedge against risks of interest rates rising in the future. These actions brought the fixed rate ratio on total interestbearing debt at the end of the midterm period under review to 96.6%.
(Note 1) Former Hotel Centraza Hakata underwent major renovation work accompanying the suspension of hotel operations from October 1,
2018, and has been operated as Oriental Hotel Fukuoka Hakata Station since April 9, 2019.
(Note 2) Ratio of interest-bearing debt to total assets at end of the midterm period = Balance of interest-bearing debt at end of the midterm period
÷ Total assets at end of the midterm period × 100

As of the end of the midterm period under review, JHR’s issuer ratings were as follows.
Rating agency

RatingOutlookJapan Credit Rating Agency, Ltd.

A+

StableRating and Investment Information, Inc.

A

Stable(d) Financial results
As a result of the abovementioned asset management, operating revenue, operating income and ordinary income were－ 5 －

¥12,719 million, ¥7,293 million and ¥6,354 million, respectively, for the midterm period under review (six-month period
from January 1, 2019 to June 30, 2019). Net income for the midterm period under review was ¥6,353 million.
Variable rent from the hotels with variable rent leased to the HMJ Group Hotels in the amount of ¥2,247 million is included
in operating revenue, but this amount is calculated based on the GOP of the HMJ Group Hotels for the midterm period
under review. The variable rent to be ultimately received from the HMJ Group Hotels will be determined by the full-year
GOP (12-month period) (for Hotel Oriental Express Osaka Shinsaibashi and Hilton Tokyo Odaiba, from the time of theacquisition by JHR to the end of the year) of the HMJ Group Hotels.
JHR settles accounts on an annual basis and investment corporations do not have a system for interim dividends under theInvestment Trusts Act. Accordingly, no distribution of earnings can be made in the midterm period under review.
Distribution of earnings is made based on the earnings for the full year (12-month period from January 1, 2019 to
December 31, 2019). With regard to such distribution of earnings, in accordance with the policy for earnings dividend to
exceed 90% of JHR’s distributable profit that is defined by Article 67-15 of the Act on Special Measures Concerning
Taxation (Act No. 26 of 1957; as amended; hereinafter called “the Act on Special Measures Concerning Taxation”). The
plan is, for the period ending December 31, 2019, that the amount calculated by adding a reversal of reserve for temporary
difference adjustment (amount of use of negative goodwill, such as for the dilution of dividend per unit due to capitalincrease through public offering, the amount equivalent to 50-year amortization amount of negative goodwill (Note), loss
on retirement of fixed assets incurred by the replacement of facilities and correspondence to major renovation work of
Oriental Hotel Fukuoka Hakata Station, etc.) to unappropriated retained earnings, would all be distributed except for
fractions of less than one yen of dividend per unit.
(Note)For 50-year amortization amount of negative goodwill, please refer to Dividend per Unit (Note 1) of “Assumptions of the operating
forecast for the full year of the fiscal year ending December 2019 (20th period)” on page 13.

(B) Outlook for the second half of the fiscal year(a) Investment policies and issues to be addressed
As for the environment surrounding the tourism industry, JHR considers it to be favorable with continued anticipation for
expansion of national tourism policies, such as the budget of the Japan Tourism Agency for the fiscal year 2019 increasing
by 2.4 times year on year to ¥66.5 billion (except reconstruction budget). Moreover, with the number of inbound tourists
continuing to increase notably and domestic leisure demand remaining solid, such major events as Rugby World Cup 2019and Tokyo 2020 Olympic and Paralympic Games that will demonstrate the attractiveness of “Japan” to the world are
expected to provide a further boost to the tourism industry. On the other hand, however, close attention should be paid tothe changes in supply-demand balance going forward partly because of an increase in supply from new development ofhotels following trends of increase in inbound tourism. Although the hotel market remains generally solid, the supplydemand balance appears to be loosening in certain areas and for certain asset classes, while high-grade hotels in limited
supply over demand are anticipated to continue growing strongly. As such, JHR believes that the location andcompetitiveness of individual hotels and the capabilities of the operators are essential for differentiating the hotels fromothers. JHR considers that in addition to the aforementioned differentiation, whether profitability including costmanagement can be enhanced will make a further difference in hotel performance. Under recognition of suchcircumstances, JHR intends to work with the Asset Management Company to implement strategies to differentiate hotels
owned by JHR in the market by utilizing experience which JHR has cultivated as a J-REIT specializing in hotel investment,
and manage assets based on the approach described below.
Internal growth
JHR will work to secure “stability” mainly with fixed rent contracts, while at the same time aim for “upside potential”
through implementation of active asset management, which proactively pursues greater profitability and asset value inproperties by way of a variety of measures such as expanding international brands and coordinating with HMJ.
For properties with fixed rent contracts, JHR will focus on setting, maintaining and increasing appropriate rents based on
the rent levels in the market where respective hotels are located or the ability of each tenant to bear the cost of rent, andplans to aim at raising rents (including introduction of a revenue sharing structure) in accordance with the conditions of theaccommodation market.
For hotels under variable rent contracts and under a management contract structure, JHR is working to increase variable
rent and reduce management contract fees by implementing the active asset management strategy.
i) Properties under variable rent contracts－

6 －JHR works to enhance the profitability of its properties under variable rent contracts through its active asset management
strategy. JHR has adopted world-leading international brands such as Hilton, Marriott, Sheraton, Mercure and Holiday Inn
as well as leading brands in Japan including Oriental Hotel and Hotel Nikko that are operated in various areas throughout
the country and, together with excellent operators, aims to increase variable rent through improved performance of thesehotels. JHR coordinates with the operators in an effort to enhance hotel performance by requesting them to implement
marketing initiatives to attract a wider range of demand with considerations given to solid domestic leisure demand andincreasing leisure demand from inbound visitors, measures to maintain and increase room rates, and realization of synergy
effects like cost reductions from operating multiple properties, among other issues. Moreover, JHR conducts strategic
capital expenditure (CAPEX) such as renovating guest rooms, etc. for improving property competitiveness primarily forhotels with high growth expectations, in an attempt to further enhance hotel earnings led by the growth in RevPAR.
ii) Properties under fixed rent contracts
JHR will increase its efforts to appropriately monitor operating conditions of these hotels and, by paying careful attention
to the ability of each tenant to bear the cost of rent, conduct negotiations with the hotels at which the ability to bear the costof rent has been enhanced through better performances so that the improvement in hotel earnings would lead to an increase
in JHR’s earnings, such as revising rents upward and introducing revenue sharing structure. In addition, JHR will execute
investment for the purpose of an ongoing program of facilities and equipment maintenance and improvement to ensureeach hotel becomes prominent in the market and to maintain and enhance asset value.
External growth
In terms of external growth strategy, JHR will continue targeting acquisition of highly competitive Real Estate for Hotels,
etc. (Hotel Assets) in areas which can expect “domestic and inbound leisure demand” over the medium to long term as it
has done to date. In addition, JHR will build a portfolio which can secure stable revenues with future growth potential inmind in order to achieve upside gains.
Upon acquiring properties, JHR will focus on infrastructure aspects of the relevant Hotel Assets such as buildings andfacilities, services aspects such as the credibility of the hotel lessee and operator (including the ability of the hotel lessee tobear the cost of rent) as well as operation and management capabilities, and the properties’ locational superiority that serves
as the base for stability in demand and growth potential.
Specifically, JHR will aim to invest in “full-service hotels” and “resort hotels” that pose barriers to new opening due tosuch factors as operation and management know-how required for operating the hotels and limitations in terms of invested
capital and location. As for “limited-service hotels,” JHR emphasizes the credibility and operation capabilities of the hotel
lessee and operator as well as the building age, location, guestroom composition, profitability, etc. of the properties.
Moreover, JHR will take a particularly selective approach to hotels specialized for accommodation and of a budget type(low price zone) that mainly offers single rooms and where the source of competitiveness relies only on prices.
In the hotel investment market, harsh competition over acquisition is ongoing due in part to an increase in J-REITs andformation of non-listed private J-REITs that invest in hotels. JHR will aim for expansion of asset size that accompanies animprovement in the quality of its portfolio by acquiring highly competitive properties while leveraging its strength andadvantages and also utilizing the HMJ platform in some cases.
Finance strategy
Under the basic policy of carrying out a conservative financial strategy which places importance on securement of financial
stability and soundness, JHR intends to maintain and enhance the relationships of trust with existing financial institutions
with which it does business while endeavoring to diversify the means of financing. It aims to conduct financial operations
by keeping the ratio of interest-bearing debt to total assets at no larger than 50% as in the past. In addition, when seeking
new funding for property acquisitions or refinancing existing debt, JHR will work to disperse maturity dates of its debt aswell as further reinforce and expand its base of lenders and further diversify funding methods, including issuance ofinvestment corporation bonds, while considering the balance with the borrowing costs.
Moreover, while JHR understands that no abrupt change is likely to occur to the interest rate level in the current situation, it
aims to further improve its financial foundation by managing risk of the interest rate market by extending maturity dates
and fixing rates, etc., in preparation for addressing any change in the environment of the financial market.
－

7 －Policy on the handling of negative goodwill
JHR has conducted appropriation for dividends through reversal of reserve for temporary difference adjustment inconnection with partial amendments to the “Ordinance on Accounting of Investment Corporations” and the “Regulation forReal Estate Investment Trusts and Real Estate Investment Corporations” of The Investment Trusts Association, Japan since
the fiscal year ended December 31, 2017 (18th period). For the fiscal year under review and thereafter, JHR stipulated apolicy to reverse ¥262 million (hereinafter called the “50-year amortization amount of negative goodwill”), which is anamount equivalent to 2% (1/50) of the balance of the reserve for temporary difference adjustment for the fiscal year ended
December 2017, to pay out as dividends, with the balance of the reserve for temporary difference adjustment remaining at
the time of reversal set as the maximum reversal amount (Note).
Furthermore, in cases of incurrence of losses caused by property dispositions, impairment loss of assets, dilution ofdividend per unit due to the issuance of new investment units through public offering, etc., loss on retirement of noncurrent
assets, and suspension of sales and such due to large-scale renovations with significant impact on revenues, JHR stipulated
a policy to reverse the additional portion of negative goodwill on top of the 50-year amortization amount of negative
goodwill (¥262 million) (Note).
As for the fiscal year ending December 31, 2019 (20th period), JHR expects ¥1,177 million, which is the total of the 50year amortization amount (¥262 million), correspondence to dilution, etc. (¥310 million), loss on retirement of noncurrent
assets (¥247 million) and the correspondence to the large-scale renovation at Oriental Hotel Fukuoka Hakata Station (¥357
million) as additional amounts to dividends by reversing negative goodwill.
(Note) The policy may change due to a resolution of the board of directors, and it does not guarantee specific amounts, etc., for the future.

Initiatives for Sustainability
In recent years, the risks and opportunities of ESG (Environment, Social and Governance) issues have grown in importancein the investment management industry from the standpoint of long-term sustainability. JHR recognizes that conducting
real estate investment management based on consideration for ESG is important to enhance unitholder value and to further
raise the attractiveness of JHR. In addition, JHR believes that it is indispensable to establish favorable relationships with its
stakeholders including unitholders, hotel users (guests), lessees, operators, business partners including property managers,etc., local communities, officers and employees of the Asset Management Company and others and to fulfill our social
responsibilities expected from each of them.
In order to put such ideas into practice, JHR, along with the Asset Management Company, has established a “Sustainability
Policy” as guidance to ESG initiatives. We have promoted efforts to reduce environmental impact at properties in our
portfolio based on this policy, and received the Building-Housing Energy-efficiency Labeling System (BELS) evaluationfor Hotel Nikko Alivila and Mercure Okinawa Naha in February 2018 as first such cases for hotel properties owned by a JREIT (Note 1). Moreover, in September 2018, JHR became the first J-REIT specializing in hotels (Note 1) to be recognized
by GRESB for its environmental awareness and sustainability initiatives, acquiring “Green Star,” the highest ranking, in the
GRESB Real Estate Assessment (Note 2) and “4 Stars” in the GRESB Rating. Furthermore, JHR issued green bonds inJuly 2019 to allocate funds mainly to work contributing to energy conservation of the renovation work at Oriental Hotel
Fukuoka Hakata Station. It was the first case of a J-REIT specializing in hotels issuing green bonds (Note 1).
Recognizing its social responsibility towards local communities as a J- REIT specializing in hotels, JHR will proactively
carry out social contribution activities capitalizing on the characteristics of the hotel sector and each hotel.
(Note 1)
(Note 2)

Investigated by the Asset Management Company based on public information.
GRESB, which stands for Global Real Estate Sustainability Benchmark, is an annual benchmarking program to evaluate Environment,
Social and Governance (ESG) awareness of real estate companies and funds. It evaluates initiatives for sustainability of real estatecompanies, REITs and real estate funds, not of individual properties. The GRESB Rating makes relative assessment based on total
scores, with 5 Stars being the highest ranking.

(b) Significant subsequent events
Not applicable.

－

8 －(c) Operating forecast
The following is JHR’s operating forecast for the full year of the fiscal year ending December 31, 2019 (20th period). For
the assumptions of the operating forecast, please refer to “Assumptions of the operating forecast for the full year of the
fiscal year ending December 31, 2019 (20th period)” on page 10.

Full year of the fiscal year ending December 31, 2019 (20th period)

Forecast

Previous forecast

Increase

this time(Note 1)

(Decrease)

Operating revenue¥28,666 million¥28,876 million¥(210) million

Operating income¥17,227 million¥17,371 million¥(143) million

Ordinary income¥15,274 million¥15,274 million¥0 million

Net income¥15,273 million¥15,273 million¥0 million¥3,686¥3,686

¥－

¥－

¥－

¥－

Dividend per unit
Dividend per unit resulting from excess of earnings(Note 1)
(Note 2)

These are the figures announced in the “Financial Report for the Fiscal Year Ended December 31, 2018 (19th Period)” dated February
20, 2019.
The forecast figures above are the current forecasts calculated based on certain assumptions. As such, actual operating revenue,
operating income, ordinary income, net income, dividend per unit and dividend per unit resulting from excess of earnings may vary due
to changes in the circumstances. Furthermore, the forecasts are not intended to guarantee any dividend amount.

－

9 －Assumptions of the operating forecast for the full year of the fiscal year ending December 2019 (20th period)

Item
Calculation
PeriodAssumptions
・Full year of the fiscal year ending December 2019 (20th Period): January 1, 2019 through December 31,
2019 (365 days).
・The 43 properties owned by JHR as of today are assumed.
Assets under ・It is assumed that there will be no change (acquisition or disposition of properties, etc.) in assets underManagement
management through the end of the fiscal year ending December 2019 (20th period). However, the actual
results may fluctuate depending on changes in assets under management that may take place.
・Operating revenue is calculated based on the conditions of the lease and other contracts effective as oftoday, taking the competitiveness of hotels, market environment and other factors into consideration. If
there are lease contracts with regard to facilities other than hotels, such as retail facilities and offices,
operating revenue calculated based on the said lease contracts is included.
・Rents, etc. of the main hotels are calculated based on the following assumptions.
(1) The 21 hotels with variable rent, etc. (*1)
1) The Twelve HMJ Hotels (*1)
The assumptions of the fixed rent and variable rent are as follows.
Total rent = Fixed rent + Variable rent
Variable rent = [Total GOP of the hotels – GOP base amount] × Variable rent ratio (%)(Unit: millions of yen)

The Five HMJ Hotels(*1)

Operating
Revenue

Okinawa Marriott
Resort & Spa
Sheraton Grand
Hiroshima Hotel(*2)
Oriental Hotel
Fukuoka
Hakata Station (*3)
Holiday Inn
Osaka Namba
Hilton Tokyo Narita
AirportInternational Garden
Hotel Narita
Hotel Nikko Nara
Subtotal
ACTIVE-INTER
CITY HIROSHIMA(Office andcommercial tenants)
Total

Total GOP of
the hotel(s)GOP baseamountMidterm
Full year
Midterm
Full year
Midterm
Full year
Midterm

3,276
7,985
378
1,248
515
1,088
131

1,675
3,351
350
700
234
468
212

Full year

760

425

Midterm
Full year
Midterm
Full year
Midterm
Full year
Midterm
Full year
Midterm
Full year

570
1,159
489
1,051
323
658
316
670
6,002
14,624

325
650
275
550
180
360
235
470
-

Midterm--

Variablerent ratio

85.0%
90.0%
82.5%
90.0%
92.5%
86.5%
98.0%
91.5%
-

Variable
rent

Fixed
rent

Total
rent

1,360
3,939
25
493
232
512
-

1,610
3,221
274
550
174
348
199

2,970
7,160
300
1,043
406
860
199

301

400

701

227
471
185
433
141
292
74
183
2,247
6,628

288
576
222
444
168
336
210
420
3,147
6,295

515
1,047
407
877
309
628
284
603
5,394
12,923

6

230

236

11

459

471

2,253
6,640

3,377
6,754

5,631
13,395Full year--

Midterm
Full year

-

-

－

10 －

-

Item

Assumptions
2) Income from management contracts (*4) and variable rent by the 21 hotels with variable rent, etc.
excluding the Twelve HMJ Hotels

Operating
Revenue

Midterm
Full year
ibis Tokyo Shinjuku
246
565
ibis Styles Kyoto Station
213
436
ibis Styles Sapporo
256
651
Mercure Sapporo
282
704
Mercure Okinawa Naha
170
380
Mercure Yokosuka
178297
the b suidobashi
926
the b ikebukuro
70
153
the b hachioji
3266
the b hakata
75
162
Total
1,537
3,443
(*1) The 21 hotels with variable rent, etc. represent the 21 hotels comprising the Eleven HMJ Hotels plus ibis
Tokyo Shinjuku, ibis Styles Kyoto Station, ibis Styles Sapporo, Mercure Sapporo, Mercure Okinawa Naha,
Mercure Yokosuka, the b ikebukuro, the b hachioji, the b hakata and the b suidobashi. The Eleven HMJ Hotels
are Kobe Meriken Park Oriental Hotel, Oriental Hotel tokyo bay, Namba Oriental Hotel, Hotel Nikko Alivila,
and Oriental Hotel Hiroshima (hereinafter called “the Five HMJ Hotels”), plus Okinawa Marriott Resort &Spa, Sheraton Grand Hiroshima Hotel (ACTIVE-INTER CITY HIROSHIMA), Holiday Inn Osaka Namba,
Hilton Tokyo Narita Airport, International Garden Hotel Narita, and Hotel Nikko Nara. With regard to Oriental
Hotel Fukuoka Hakata Station (formerly Hotel Centraza Hakata), major renovation works causing thesuspension of hotel operation (hereinafter called the “Renovation”) were implemented from October 2018 toApril 8, 2019, and figures for Oriental Hotel Fukuoka Hakata Station are not included in the tabulation of the
21 hotels with variable rent, etc. as hotel operation was suspended during the Renovation. Moreover, the 12
hotels comprising the Eleven HMJ Hotels plus Oriental Hotel Fukuoka Hakata Station are hereinafter called
the “Twelve HMJ Hotels.” The same shall apply hereinafter.
(*2) Stating the rent for Sheraton Grand Hiroshima Hotel, the major facility of ACTIVE-INTER CITYHIROSHIMA.
(*3) Due to the impact of the suspension of hotel operation due to the Renovation implemented in the first half ofthe fiscal year ending December 2019 (20th period), GOP of the hotel for the first half is not expected to
exceed GOP base amount. Therefore, variable rent for the midterm is not recognized.
(*4) For income from management contracts, it is assumed that each hotel’s GOP amount is recognized as income
from management contracts and the management contract fees to be paid by JHR are recognized as an
operating expense.

(2) The Two New HMJ Hotels (Acquired assets) (*1)1) Hotel Oriental Express Osaka Shinsaibashi
The assumptions of the fixed rent and variable rent are as follows.
Total rent = Fixed rent + Variable rent
Variable rent = [Total GOP of the hotels – GOP base amount] × Variable rent ratio (%)(Unit: millions of yen)
Total GOP GOP base Variable
Variable
Fixed
Total
of theamount
rent
rent
rent
rent
hotel(s)ratioMidterm
47
47
Hotel Oriental Express
91.0%
Osaka Shinsaibashi (*2)
Full year
90
64
24
102
126
(*1) The Two New HMJ Hotels (Acquired assets) are Hotel Oriental Express Osaka Shinsaibashi, which was
acquired on February 1, 2019, and Hilton Tokyo Odaiba, which was acquired on April 8, 2019. The same shallapply hereinafter.
(*2) Hotel Oriental Express Osaka Shinsaibashi was acquired on February 1, 2019, and has a lease contract which
adopts fixed rent until June 30, 2019, and fixed rent as well as variable rent which is linked to GOP of thehotel from July 1, 2019. GOP of the hotel for the full year is the GOP of the hotel from July 2019 throughDecember 2019. The fixed rent for the full year is the assumed figures for 334 days from February 1, 2019 to
December 31, 2019. Base GOP amount will be ¥128 million and annual fixed rent will be ¥110 million
starting from the fiscal year ending December 2020.

－

11 －

Item

Assumptions
2) Hilton Tokyo Odaiba
The assumptions of the fixed rent and variable rent are as follows. As to Hilton Tokyo Odaiba, variable
rent is not expected for the fiscal year ending December 2019 (20th period).
Total rent = Fixed rent + Variable rent
Variable rent = [Total AGOP of the hotels (*3) – AGOP base amount] × Variable rent ratio (%)(Unit: millions of yen)
AGOP of AGOP
Variable
Variable
Fixed
Total
the hotel
base
rent
rent
rent
rent
(*4)
amountratio(*4)
Midterm
528
817
714
714
Hilton Tokyo Odaiba
30.0%
Full year
2,087
2,450
2,264
2,264
(*3) AGOP (adjusted GOP) is the amount calculated by subtracting certain fees and other items from GOP. The
same shall apply hereinafter.
(*4) As Hilton Tokyo Odaiba was acquired on April 8, 2019, AGOP of the hotel for the midterm and the full year is
the AGOP of the hotel from April through June, 2019 and from April through December 2019, respectively.
The fixed rent for the full year is the assumed figures for 268 days from April 8, 2019 through December 31,
2019. AGOP base amount after the fiscal year ending December 2020 is ¥2,970 million, and the annual fixed
rent is ¥3,100 million.
(3) Other hotels subject to variable rent, etc.
Variable rent from other hotels subject to variable rent, etc.

Operating
Revenue(Unit: millions of yen)
Full year
16

Comfort Hotel Tokyo Higashi Nihombashi

Midterm
16

Smile Hotel Nihombashi Mitsukoshimae

20

20

Hotel Vista Kamata Tokyo－

22

Chisun Inn Kamata

41

84

Undisclosed (*)

Undisclosed (*)

114

114

Hilton Tokyo Bay

Undisclosed (*)

Undisclosed (*)

Hilton Nagoya

Undisclosed (*)

Undisclosed (*)

Hotel Keihan Universal City
Sotetsu Fresa Inn Shimbashi-Karasumoriguchi

Total of 8 hotels
815
1,455
(*) Undisclosed since tenants that concluded lease contracts did not agree to disclose rent revenue, etc.
･ The following is the breakdown of variable rent and income from management contracts (*1)
<Breakdown of variable rent, etc. for the fiscal year ending December 2019 (20th period)>(Unit: millions of yen)
Midterm
Full year
2,253
6,640
The Twelve HMJ Hotels (*2)
1,537
3,443
The 21 hotels with variable rent, etc. excluding the Twelve HMJ Hotels
24
The Two New HMJ Hotels (Acquired assets)－
Other hotels with variable rent, etc. (8 hotels)
815
1,455
Total (32 hotels)
4,606
11,563(*1) For details of contracts for variable rent and income from management contracts, please refer to page 48, “3.
Reference Information (1) Assets under management (C) Other major assets under management; C. Overview
of the hotel business; a. Rent structures of hotels with variable rent, management contract or revenue sharing.”(*2) This figure includes revenue-linked rent of office and commercial tenants at ACTIVE-INTER CITYHIROSHIMA.

－

12 －

Item

Assumptions
・With respect to real estate leasing expenses, which constitute a major part of the operating expenses,
expenses other than depreciation are calculated based on historical data, and variable factors are reflectedin the calculation.
・It is assumed that ¥1,658 million will be recognized as expenses for fixed asset tax, city planning tax andother taxes and public dues.
・In general, fixed asset tax and city planning tax and other taxes and public dues on acquired assets aresettled with the previous owners at the time of acquisition, calculated on a pro rata basis of the holding
period. For JHR, such settlement amount is included in the acquisition price, and it will not berecognized as expenses for the calculation period.
・Capital expenditure is assumed to be ¥6,863 million (¥2,348 million for capital expenditure I, ¥913
million for capital expenditure II, ¥454 million for capital expenditure III, and ¥3,147 million for
expenditure related to the Renovation at Oriental Hotel Fukuoka Hakata Station (formerly Hotel
OperatingCentraza Hakata)) for the fiscal year ending December 2019 (20th period).
Expenses(*) JHR classifies capital expenditures into the following three categories. (I) Capital investment related
to renewal of buildings, facilities, and equipment which is required to maintain proper values ofproperties, (II) capital investment for fixtures and furniture that are not directly related to building
structure or facilities but necessary for operating hotels, and (III) strategic capital investment such as
renovating guest rooms, etc. for maintaining / improving the competitiveness of the hotels.
・Depreciation is calculated using the straight-line method including the planned capital expenditures
above, and is assumed to be ¥4,636 million.
・Repair expenses for buildings are recognized as expenses in the estimated amount necessary for each
operating period. Please note that the repair expenses of each operating period may differ materiallyfrom the forecast amount for various reasons, such as; (1) Emergency repair expenses may be necessary
due to damage to buildings from unexpected causes; (2) The amount of repair expenses generally tends
to increase in difference over time; and (3) Repair expenses are not required on a regular basis.
・¥1,962 million is expected for borrowing-related costs, including interest expense, amortization for
Non-operating
financing fee, arrangement fee, etc. and other non-operating expenses.
Expenses・Expenses for issuance of new investment units and secondary offering are amortized over a period of
three years by the straight-line method.
・It is assumed that the balance of interest-bearing debt (sum of loans and investment corporation bonds) is¥168,371 million as of the end of June, 2019. It is assumed that the balance of interest-bearing debt will
Interestbe ¥168,771 million as of December 31, 2019.
bearing Debt
・It is assumed that ¥6,317 million loans, which are due within the fiscal year ending December 2019
(20th period), will be fully refinanced.
・Dividend per unit for the fiscal year ending December 2019 (20th period) is calculated based on thefollowing assumptions.
Net income
Reversal of reserve for temporary difference adjustment(negative goodwill)
50-year amortization amount of negative goodwill (*1)

Dividend per
Unit¥15,273 million¥262 million

Loss on retirement of noncurrent assets (*2)¥247 million

Correspondence to major renovation works (*3)¥357 million

Adjustment for dilution (*4)¥310 million

Distributable amount¥16,451 million

Total number of investment units issued

4,462,347 units

Dividend per unit

¥3,686(*1) ¥262 million (hereinafter called “50-year amortization amount of negative goodwill”) is scheduled to be paidout as dividends, with the remaining balance of the reserve for temporary difference adjustment set as the
maximum amount, for every fiscal year.
(*2) The amount recognized as a loss on retirement of noncurrent assets will be appropriated by reserve fortemporary difference adjustment (negative goodwill) and is expected to have no impact on dividend per unit.

－

13 －

Item

Assumptions

Dividend per
Unit(*3) Major renovation works causing the suspension of hotel operation were implemented at the former Hotel
Centraza Hakata from October 1, 2018, and the hotel opened as Oriental Hotel Fukuoka Hakata Station on
April 9, 2019. Taking into consideration the effect on dividend by the suspension of hotel operation due to theRenovation, ¥357 million, which is equivalent to the difference between NOI after depreciation of the former
Hotel Centraza Hakata from January to March 2018 and assumed NOI after depreciation from January to
March 2019, will be appropriated by reserve for temporary difference adjustment (negative goodwill).
(*4) We plan to avoid the impact of the dilution of investment units on dividend per unit for the fiscal year ending
December 2019 caused by not owning The Two New HMJ Hotels (Acquired assets) for the full fiscal year
ending December 2019 and by the issuance of new investment units through appropriation of the reserve fortemporary difference adjustment (negative goodwill).

・Dividend per unit may fluctuate due to various causes, such as fluctuation of rent revenue resulting fromtransfer of assets under management, change of tenants, etc. of hotels, change in the businessenvironment surrounding tenants, etc. of hotels, unexpected repairs, and actual number of new units
issued, etc.
・The remaining balance of the reserve for temporary difference adjustment (negative goodwill) after theappropriation of the reserve for temporary difference adjustment (negative goodwill) for dividends forthe fiscal year ending December 2019 (20th period) is expected to be ¥10,616 million.
Dividend per
Unit
・It is assumed that the excess of earnings (dividend per unit resulting from excess of earnings) will not be
Resulting
distributed.
from Excessof Earnings
・It is assumed that revision in law, tax system, accounting standard, regulations of the listing, regulationsof The Investment Trusts Association, Japan that may impact the forecast above will not be made.
Other
・It is assumed that unexpected major incident will not occur in the general economy, real estate market
and hotel business environment, etc.
・The numerical values are rounded down to the nearest millions of yen in the assumptions above.

－

14 －

<Reference Information 1> Highlights of the operating forecast and forecast of dividend
Comparison with the operating forecast and forecast of dividend (previous forecast) for the full fiscal year ending
December 2019, which was released in the “Financial Report for the Fiscal Year Ended December 31, 2018 (January 1,
2018 – December 31, 2018)” dated February 20, 2019, and the major factors causing the variance.
(Unit: JPY MM)
FY12/2018(19th Period)
ActualProperties

(*3)

(*4)

(B)

(B)-(A)

43

43

43

374,508

374,508

374,508-

Operating Revenue

28,25328,876

28,66629,527(210)(0.7%)

Real Estate
Operating Revenue

26,31828,876

28,66629,527(210)(0.7%)

17,945

112

0.7%

56.2%

43.8%

Composition

14,788 58.8%

11,529 41.2%

Composition

16,98911,886

59.7%

40.3%

-

Composition

17,102 60.8%

11,563 39.2%

Factors Causing Variance%41

11,582

(323)

-

-

(0.8%)

1,934

-

-

-

NOI (*3)

22,10424,49824,29824,827(200)

NOI Yield

7.1%

6.5%

6.5%

6.6%

(0.1%)NOI after
Depreciation (*3)

17,974

19,584

19,411

19,853(173)

NOI Yield after
Depreciation

5.8%

5.2%

5.2%

5.3%

(0.0%)

Operating Income

17,993

17,371

17,227

17,604(143)(0.8%)

Ordinary Income

16,211

15,274

15,274

15,6730

0.0%

Net Income

16,21015,273

15,273

15,6720

0.0%

Reserve for Temporary
Difference Adjustments(Negative Goodwill)

563

1,177

1,177

867

-

Reserve for Special
Advanced Depreciation(1,174)

-

-

-

-

Total Dividends

15,602

16,44816,448

16,5370

Number of Units
Issued (Unit)

4,010,847

4,462,347

4,462,347

4,462,347

-

3,890

3,686

3,686

3,706

-

1. Increase in rent from hotels by JPY100 MM
2. Increase in rent from office and commercial tenants, etc. by
JPY12 MM

1. Decrease in variable rent, etc. from the 21 hotels with variable
rent, etc. (*2) by JPY373 MM
2. Increase in variable rent from Oriental Hotel Fukuoka Hakata(2.7%)
Station by JPY75 MM
3. Decease in rent from other hotels with revenue sharing, etc. by
JPY24 MM

Gain on Sale ofReal Estate
Properties

Dividend per Unit (JPY)

(*2)

(A)

Comparison with
the Previous
Forecast

Forecast This Time(annualized effect)(*1)

309,370

Variable Rent(*1)

Previous Forecast

Forecast ThisTime

Acquisition Price

Composition

Dividend(reference)

No. of Properties

Fixed Rent, etc.

ProfitandLoss

FY12/2019(20th Period)(0.9%)

Amount to be reversed from reserve for temporary
difference adjustments (*4)
19th Period:
50-year amortization amount of negative goodwill: JPY262 MM
Correspondence to loss on retirement of noncurrent assets:JPY35- MM
Correspondence to major renovation works: JPY265 MM
20th Period:
0.0%50-year amortization amount of negative goodwill: JPY262 MM
Correspondence to loss on retirement of noncurrent assets:JPY247
MM
Correspondence to major renovation works: JPY357 MM
Correspondence to dilution: JPY310 MM-

For the assumptions of the annualized effect for the forecast this time, please refer to “<Reference Information 2> Assumptionsof the annualized effect (full year effect) for the forecast for the fiscal year ending December 2019 (20th period)” below.
For the assumptions of the 21 hotels with variable rent, etc., please refer to “<Reference Information 1> Assumptions of theoperating forecast for the full year of the fiscal year ending December 2019 (20th period)” below.
Each is calculated using the following formula. The same shall apply hereinafter.
NOI (Net Operating Income) = Real estate operating revenue – Real estate operating costs + Depreciation + Loss on retirementof noncurrent assets + Asset retirement obligations expenses
NOI yield = NOI ÷ Acquisition price
NOI after depreciation = Real estate operating revenue – Real estate operating costs
NOI yield after depreciation = NOI after depreciation ÷ Acquisition priceFor the details of the reversed amount of the reserve for temporary difference adjustment, please refer to “<Reference
Information 1> Assumptions of the operating forecast for the full year of the fiscal year ending December 2019 (20th period)”
below.

－

15 －<Reference Information 2> Assumptions of the annualized effect (full year effect) for the forecast for the fiscal year
ending December 2019 (20th period)(1) There is no change in operating revenue and operating expenses of the existing properties excluding The Two New
HMJ Hotels (Acquired assets) from “<Reference Information 1> Assumptions of the operating forecast for the full
fiscal year ending December 2019 (20th period).”(2) The fixed rent and variable rent for Hotel Oriental Express Osaka Shinsaibashi for the full year are calculated asfollows.
Total rent for the fiscal year ending December 2019 (20th Period) (full year) (¥153 million)= Fixed rent (¥110 million) + Variable rent
Variable rent = ((1) Total GOP of the hotels – (2) GOP base amount) × 91.0 (%)(Unit: millions of yen)
(1) Total GOP of thehotels(2) GOP base amount

Variable rent((1)-(2)) × 91.0%

175

128

42

Full year(3) The fixed rent and variable rent for Hilton Tokyo Odaiba for the full year are calculated as follows.
Total rent for the fiscal year ending December 2019 (20th Period) (full year) (¥3,100 million)= Fixed rent (¥3,100 million) + Variable rent
Variable rent = ((1) AGOP of the hotels – (2) AGOP base amount) × 30.0 (%)(Unit: millions of yen)
(1) AGOP of the hotel(2) AGOP base amount

2,648

2,970

Full year

Variable rent((1)-(2)) × 30.0%－(*)(*) The variable rent is not expected.

(4) The fixed asset tax and city planning tax and other taxes for The Two New HMJ Hotels (Acquired assets) are
assumed to be ¥326 million, which is equivalent to twelve months.
(5) For non-operating expenses, borrowing costs related to asset acquisitions, expenses incurred in the issuance of new
investment units and others are assumed on an annualized basis (for twelve months). On the other hand, major onetime financial costs incurred for asset acquisition are not included.

－

16 －

<Reference Information 3> Hotel operation indexes, sales and GOP
The numeral figures are based on figures obtained from hotel lessees, etc. Please note that these figures have not been
audited nor have they gone through other procedures. No guarantee is made as to the accuracy or completeness of the
figures and information.
ADR and RevPAR are rounded off to the nearest yen. Sales and GOP are rounded off to the nearest million yen.
Occupancy rate and comparison with the previous period are rounded off to one decimal place.
<1>The 21 hotels with variable rent, etc.
Fiscal year ended December 2018
Comparison
with theprevious period

Previous
forecast

Forecast thistime(first half:
actual)Comparison
with theprevious
periodComparison
with theprevious
forecast

87.3%

0.3pt

88.0%

86.5%

(0.7pt)

87.1%

89.9%

89.3%

2.2pt

87.2%

(1.4pt)(1.5pt)

89.0%

87.9%

0.7pt

14,685(0.6pt)2.2%

14,965

14,7490.4%

17,0200.4%

17,321

16,904(0.7%)

15,861

1.1%

16,16615,852(0.1%)

12,817

2.6%

13,173

12,765(0.4%)

14,831(1.2%)

15,57915,097

1.8%

13,8330.5%

14,386

13,9400.8%

22,9580.8%

23,684

23,1240.7%

26,257

27,331

26,656

1.5%

49,215(1.2%)

51,01549,780

1.1%

7,715

(0.3%)

2.6%

7,774

7,709

(0.1%)

10,1960.3%

10,550

10,189(0.1%)

17,911

1.3%

18,324

17,898(0.1%)

ActualOccupancy
Rate

ADR
(*1)

RevPAR(*2)

Sales(JPY 1M)

GOP(JPY 1M)

First halfof the year
Second halfof the year
Full year
First halfof the year
Second halfof the year
Full year
First halfof the year
Second halfof the year
Full year
First halfof the year
Second halfof the year
Full year
First halfof the year
Second halfof the year
Full year

Fiscal year ending December 2019

(0.6pt)(1.1pt)(1.4%)(2.4%)(1.9%)(3.1%)(3.1%)(3.1%)(2.4%)(2.5%)(2.4%)(0.8%)(3.4%)(2.3%)(*1) ADR: Represents average daily rate, which is calculated by dividing revenue for rooms department for a given
period (including service charges) by the total number of rooms sold during the period. As for the service
charge, Kobe Meriken Park Oriental Hotel, Oriental Hotel tokyo bay, Namba Oriental Hotel, Hotel Nikko
Alivila, Oriental Hotel Hiroshima, Okinawa Marriott Resort & Spa, Sheraton Grand Hiroshima Hotel(ACTIVE-INTER CITY HIROSHIMA), International Garden Hotel Narita, Hotel Nikko Nara and Oriental
Hotel Fukuoka Hakata Station request 10%, Hilton Tokyo Narita Airport requests 12% and Hilton Tokyo
Odaiba requests 13%. Moreover, other hotels among the 21 hotels with variable rent, etc. do not request service
charges. The same shall apply hereinafter.
(*2) RevPAR: Represents revenue per available room, which is calculated by dividing revenue for rooms
department for a certain period (including service charges) by the total number of rooms available for saleduring the period. Revenue per available room given the product of ADR and occupancy rate. The same shallapply hereinafter.

－

17 －

<2> The Eleven HMJ Hotels
The figures are the total amount of eleven hotels which exclude Oriental Hotel Fukuoka Hakata Station (formerly
Hotel Centraza Hakata) from the Twelve HMJ Hotels in order to exclude the impact of the Renovation whichcaused suspension of sales. The same shall apply hereinafter.
Fiscal year ended December 2018
Previous
forecast

Forecast thistime(first half:
actual)Comparison
with theprevious
periodComparison
with theprevious
forecast(0.1pt)

88.1%

87.6%

0.3pt

(0.5pt)

90.3%

89.4%

1.7pt

87.5%

(1.3pt)

89.2%

88.5%

1.0pt

16,674(0.7pt)(0.9pt)2.3%

16,923

16,497(1.1%)(2.5%)

20,02019,498(1.4%)

18,240(0.2%)

0.9%

18,50418,025(1.2%)(2.6%)

14,552

2.2%

14,906

14,453(0.7%)(3.0%)

17,33818,075

17,4250.5%

15,957(1.7%)

0.1%

16,504

15,951(0.0%)(3.6%)

18,7540.2%

19,331

18,9150.9%(2.2%)

21,831

22,575

21,951

0.5%

40,585(1.4%)

41,90640,865

0.7%

5,809

(0.7%)(2.8%)

2.2%

5,865

5,871

1.1%

0.1%

8,141

1.2%

8,337

7,992

(1.8%)

13,9501.7%

14,202

13,864(0.6%)

Comparison
with theprevious period

ActualOccupancy
Rate

ADR

RevPAR

Sales(JPY 1M)

GOP(JPY 1M)

First halfof the year
Second halfof the year
Full year
First halfof the year
Second halfof the year
Full year
First halfof the year
Second halfof the year
Full year
First halfof the year
Second halfof the year
Full year
First halfof the year
Second halfof the year
Full year

Fiscal year ending December 2019

87.3%
87.7%

19,771(0.7pt)(2.6%)(3.3%)(2.5%)(4.1%)(2.4%)<3> Hotel Oriental Express Osaka Shinsaibashi
Fiscal year ended December 2018
Comparison
with theprevious period

Previous
forecast

Forecast thistime(first half:
actual)Comparison
with theprevious
periodComparison
with theprevious
forecast

－

－

90.0%

92.3%

－

2.3pt

－

－

90.0%

91.5%

－

1.5pt

－

－

90.0%

91.9%

－

1.9pt

－

－

10,500

9,611

－

－

－

10,50010,429－(8.5%)－－

10,50010,021

－

－

－

9,449

8,868

－

(4.6%)

－

－

9,449

9,544

－

1.0%

－

－

9,449

9,209

－

－

－

224

205

－

(2.5%)

－

－

226

226

－

0.1%

－

－

450

431

－

ActualOccupancy
Rate

ADR

RevPAR

Sales(JPY 1M)

First halfof the year
Second halfof the year
Full year
First half ofthe year
Second halfof the year
Full year
First half ofthe year
Second halfof the year
Full year
First half ofthe year
Second halfof the year
Full year

Fiscal year ending December 2019

－

18 －

(0.7%)(6.1%)(8.4%)(4.1%)

GOP(JPY 1M)(*)

First half of theyear
Second halfof the year

－

－

102

84

－

－

－

102

91

－

Full year

－

－

204

175

－

(17.0%)(11.0%)(14.0%)As Hotel Oriental Express Osaka Shinsaibashi opened on April 2, 2018, figures before the fiscal year
December ended 2018 are not shown.

<4> Hilton Tokyo Odaiba
Fiscal year ended December 2018
Comparison
with theprevious period

Previous
forecast

Forecast thistime(first half:
actual)Comparison
with theprevious
periodComparison
with theprevious
forecast

95.2%

0.9pt

95.2%

85.9%

92.9%

94.1%

91.3%

94.7%

88.6%

28,831(1.1pt)(1.6pt)(9.3pt)94.0%(3.0pt)(9.3pt)6.8%

28,831

29,263(5.4pt)1.5%(6.0pt)31,3968.6%

32,00132,4473.3%

1.4%

30,1087.6%

30,42030,9172.7%

1.6%

27,451

7.7%

27,451

25,135

29,154

5.3%

30,11529,622(8.4%)

1.6%(8.4%)

28,3096.4%

28,79427,397

4,591

9.5%

4,591

4,258

(3.2%)(4.9%)

5,008

7.3%

5,081

4,744

9,599

8.3%

9,672

9,001

1,374

21.7%

1,374

1,144

1,723

15.2%

1,720

1,624

3,097

18.0%

3,094

2,768

ActualOccupancy
Rate

ADR

RevPAR

Sales(JPY 1M)

GOP(JPY 1M)

First halfof the year
Second halfof the year
Full year
First halfof the year
Second halfof the year
Full year
First halfof the year
Second halfof the year
Full year
First halfof the year
Second halfof the year
Full year
First halfof the year
Second halfof the year
Full year(*)

Fiscal year ending December 2019(7.3%)(2.8pt)1.5%(1.6%)(7.3%)(5.3%)(6.6%)(16.7%)(16.7%)(10.6%)(10.5%)(6.2%)(5.7%)(6.9%)(5.6%)

Hilton Tokyo Odaiba was acquired on April 8, 2019. The figures for the fiscal year ended December 2018 andthe fiscal year ending December 2019 are calculated as the total for full year including figures prior to theacquisition date.

－

19 －

2. Semi-annual financial statements(1) Semi-annual balance sheets
As of
December 31, 2018
AssetsCurrent assets
Cash and deposits
Cash and deposits in trust
Operating accounts receivable
Prepaid expenses
Income taxes receivable
Consumption taxes receivable
Derivative assets
Other current assets
Total current assets
Noncurrent assets
Property and equipment, at cost
Machinery and equipment
Accumulated depreciation
Machinery and equipment, net
Tools, furniture and fixtures
Accumulated depreciation
Tools, furniture and fixtures, net
Construction in progress
Buildings in trust
Accumulated depreciation
Buildings in trust, net
Structures in trust
Accumulated depreciation
Structures in trust, net
Machinery and equipment in trust
Accumulated depreciation
Machinery and equipment in trust, net
Tools, furniture and fixtures in trust
Accumulated depreciation
Tools, furniture and fixtures in trust, net
Land in trust
Construction in progress in trust
Net property and equipment
Intangible assets
SoftwareLeasehold rights in trust
Fixed-term leasehold rights in trust
Other intangible assets
Total intangible assets
Investments and other assets
Security deposits
Leasehold and security deposits in trust
Long-term prepaid expenses
Derivative assets
Reserve for repairs and maintenanceTotal investments and other assets
Total noncurrent assets
Deferred assets
Investment unit issuance costs
Investment corporation bond issuance costs
Total deferred assets
Total assets

*1

－

20 －

(thousands of yen)
As ofJune 30, 201925,706,559
11,478,156
2,474,121
527,491
34
2,229
77,98740,266,582

13,751,181
11,060,584
1,795,082
502,587
679,677
3,609
62,46027,855,181

398,134(150,113)
248,021
3,121,628(1,505,450)
1,616,178
122,605,307(18,178,952)
104,426,355
2,535,539(367,369)
2,168,169
598,790(125,229)
473,561
136,526(95,925)
40,601
163,151,369
765,363
272,889,620

463,270(170,700)
292,5693,692,359(1,754,936)
1,937,423
2,005
135,423,580(19,831,856)
115,591,724
2,707,518(401,511)
2,306,006
609,975(139,639)
470,336
136,526(100,232)
36,293219,893,624
12,393
340,542,377*1

199,563
28,532,362
5,175,217
8,436
33,915,580

205,00228,532,362
5,106,079
8,096
33,851,540

12,520150,223
2,687,996
45,125292,508
3,188,374
309,993,574

12,520150,223
2,885,627
309,8443,358,215
377,752,134

124,220
172,390296,610
350,556,767

197,096
214,164
411,261
406,018,577

(thousands of yen)
As ofDecember 31, 2018
Liabilities
Current liabilities
Operating accounts payable
Short-term loans payable
Current portion of investment corporation bonds
Current portion of long-term loans payable
Accrued expenses
Income taxes payable
Consumption taxes payable
Advances received
Dividends payable
Deposits received
Derivative liabilities
Other current liabilities
Total current liabilities
Long-term liabilities
Investment corporation bonds
Long-term loans payable
Tenant leasehold and security deposits
Tenant leasehold and security deposits in trust
Derivative liabilities
Deferred tax liabilities
Asset retirement obligations
Total long-term liabilities
Total liabilities
Net assets
Unitholders’ equity
Unitholders’ capital
SurplusCapital surplus
Voluntary reserve
Reserve for temporary difference adjustment
Reserve for special account for tax purpose reduction
entry
Total voluntary reserve
Unappropriated retained earnings (undisposed loss)*2

Total surplus
Total unitholders’ equity
Valuation and translation adjustments
Deferred gains (losses) on hedges
Total valuation and translation adjustments
Total net assets
Total liabilities and net assets

*3

－

21 －

As of
June 30, 2019

1,941,008
2,000,000
11,117,000
530,377
1,210
496,921882,052
18,275
7,315
17,608
9,013
17,020,784

1,572,700
900,000
13,709,000
605,853605
895,128
22,16027,283
5,999
347,383
18,086,114

31,600,000
91,954,000
1,041,016
4,593,946
514,339
14,838445,622130,163,763
147,184,548

39,600,000
114,162,000
1,040,520
4,677,460
983,4911,140
446,650
160,911,262
178,997,377

153,516,129

186,894,169

21,746,398

21,746,398

12,357,644*2

11,794,071-

1,174,860

12,357,644
16,213,482

12,968,932
6,353,516

50,317,525

41,068,847

203,833,655

227,963,016(461,435)(461,435)
203,372,219
350,556,767(941,817)(941,817)
227,021,199
406,018,577*3

(2) Semi-annual statements of income(thousands of yen)
For the six months ended
June 30, 2018
Operating revenue
Real estate operating revenue
Other real estate operating revenue
Total operating revenue
Operating expenses
Real estate operating costs
Asset management fee
Asset custody and administrative service fee
Directors’ compensation
Other operating expenses
Total operating expenses
Operating income
Non-operating income
Interest income
Gain on forfeiture of unclaimed dividends
Gain on insurance claims
Refunded fixed asset tax
Interest on tax refunds
Gain on derivative instruments
Total non-operating income
Non-operating expenses
Interest expense
Interest expense on investment corporation bonds
Borrowing costs
Amortization of investment corporation bond issuance costs
Amortization of investment unit issuance costs
Loss on derivative instruments
Other
Total non-operating expenses
Ordinary income
Income before income taxes
Income taxes – current
Total income taxes
Net income
Retained earnings brought forward
Unappropriated retained earnings (undisposed loss)－*1

11,749,691
571,413
12,321,105

For the six months ended
June 30, 2019

*1

*1

*1

22 －

4,071,061
762,553
57,6576,500
103,955
5,001,728
7,319,377

12,143,382
576,264
12,719,646*1*1

4,425,425
840,598
58,704
6,900
94,934
5,426,561
7,293,084

119
3,583
2,106
10,354
118
11,87528,158

192
4,361
3,014
2,100
9,668

419,253
116,618
299,397
13,32376,47031,4903,214
959,768
6,387,767
6,387,767
605
605
6,387,162
3,048
6,390,211

444,771
126,567
253,560
13,63495,457
9,309
5,329
948,632
6,354,121
6,354,121
605
605
6,353,516
6,353,516

(3) Semi-annual statements of changes in net assets
For the six months ended June 30, 2018
(thousands of yen)
Unitholders’ equity
Surplus
Voluntary reserve

Unitholders’capitalBalance, January 1, 2018

Capitalsurplus153,516,129

Reserve fortemporarydifference
adjustment

21,746,398

Total voluntary
reserve

Unappropriatedretainedearnings(undisposed
loss)

Total
unitholders’equityTotal
surplus13,127,153

13,127,153

14,005,489

48,879,041

202,395,170(769,508)(769,508)

769,508--

Changes of items during the period:
Reversal of reserve for temporary
difference adjustment
Dividends paid

(14,771,949) (14,771,949) (14,771,949)

Net income
Net changes of items
other than unitholders’ equity
Total changes of items
during the period
Balance, June 30, 2018-

(769,508)(769,508)(7,615,278)(8,384,787)(8,384,787)

21,746,398

12,357,644

12,357,644

6,390,211

40,494,253

194,010,383

153,516,129(431,849)(431,849)

Total
net assets

201,963,321

Changes of items during the period:
Reversal of reserve for temporary
difference adjustment-

Dividends paid

(14,771,949)

Net income

Balance, June 30, 2018

6,387,162-(thousands of yen)

Net changes of items
other than unitholders’ equity
Total changes of items
during the period

6,387,162*1

Valuation and translation
adjustments
Total
Deferredvaluation andgains (losses)
translation
on hedges
adjustments
Balance, January 1, 2018

6,387,162

6,387,162
152,978

152,978

152,978

152,978

152,978(8,231,808)(278,870)(278,870)

193,731,512

－

23 －

For the six months ended June 30, 2019
(thousands of yen)
Unitholders’ equity
Surplus
Unitholders’capitalBalance, January 1, 2019
Changes of items during
the period:
Issuance of new
investment units
Reversal of reserve fortemporary difference
adjustment
Provision of reserve for
special account for tax
purpose reduction entry

153,516,129

Voluntary reserve
CapitalsurplusReserve fortemporarydifference
adjustment

Reserve for
special accountfor tax purpose
reduction entry

21,746,398

12,357,644

-

Total
unitholders’equityTotal
voluntary
reserve

Unappropriat
ed retained
earnings(undisposed
loss)

Total
surplus12,357,644

16,213,482

50,317,525

203,833,655

33,378,040

33,378,040(563,572)

1,174,860(563,572)

563,572

1,174,860(1,174,860)--(15,602,194)(15,602,194)(15,602,194)

6,353,516

6,353,516

6,353,516

Dividends paid
Net income--

Net changes of items
other than unitholders’equityTotal changes of items
during the period
Balance, June 30, 2019

Balance, January 1, 201933,378,040-(563,572)

1,174,860

611,287(9,859,966)(9,248,678)

24,129,361*1
186,894,169

21,746,398

11,794,071

1,174,860

12,968,932

6,353,516

41,068,847

227,963,016

Valuation and translation
adjustments
Total
Deferredvaluation andgains (losses)
translation
on hedges
adjustments

Total
net assets(461,435)(461,435)

Changes of items during
the period:
Issuance of new
investment units
Reversal of reserve fortemporary difference
adjustment
Provision of reserve for
special account for tax
purpose reduction entry

203,372,219

33,378,040--

Dividends paid

(15,602,194)

Net income

6,353,516

Net changes of items
other than unitholders’equity(480,381)(480,381)(480,381)

Total changes of items
during the period(480,381)(480,381)

23,648,980(941,817)(941,817)

227,021,199

Balance, June 30, 2019

－

24 －

(4) Semi-annual statements of cash flows(thousands of yen)
For the six months ended
June 30, 2018
Cash flows from operating activities
Income before income taxes
Depreciation and amortization
Loss on retirement of noncurrent assets
Loss (gain) on derivative instruments
Amortization of investment corporation bond issuance costs
Amortization of investment unit issuance costs
Interest income
Interest expense
Interest on tax refunds(Increase) decrease in operating accounts receivable(Increase) decrease in consumption taxes receivable(Increase) decrease in prepaid expenses(Increase) decrease in long-term prepaid expenses
Increase (decrease) in operating accounts payable
Increase (decrease) in accrued expenses
Increase (decrease) in consumption taxes payable
Increase (decrease) in advances received
Increase (decrease) in deposits received
Other – net
SubtotalInterest received
Interest paid
Interest received on tax refunds
Income taxes – refunded (paid)
Net cash provided by operating activities
Cash flows from investing activities
Purchase of property and equipment
Purchase of property and equipment in trust
Purchase of intangible assets
Payments of reserve for repairs and maintenanceReimbursements of tenant leasehold and security deposits
Proceeds from tenant leasehold and security deposits in trust
Reimbursements of tenant leasehold and security deposits in trust
Net cash used in investing activities
Cash flows from financing activities
Proceeds from short-term loans payable
Repayments of short-term loans payable
Proceeds from long-term loans payable
Repayments of long-term loans payable
Proceeds from investment corporation bonds
Redemption of investment corporation bonds
Payments for investment corporation bond issuance costs
Proceeds from issuance of investment units
Dividends paid
Net cash provided by financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

－

25 －

For the six months ended
June 30, 2019

6,387,767
2,031,821
11,701
19,614
13,32376,470(119)535,872(118)
668,954
90,394228,413(109,333)(137,356)(176,827)
5,409(13,934)(5,704)
9,626,348
150(522,374)
118(1,177)
9,103,065

6,354,121
2,165,386
218,928
7,208
13,63495,457(192)
571,339
679,039(679,677)
24,904(197,630)(276,727)
73,134(496,921)
13,075
19,967353,058
8,938,109
298(568,998)(1,175)8,368,233(255,151)(1,080,305)(60,514)(21,491)
52,373(70,836)(1,435,927)(856,198)(69,160,596)(48,292)(20,214)(496)
285,709(201,445)(70,001,534)

5,000,000(3,000,000)
5,050,000(16,389,000)
10,000,000(68,082)(14,757,541)(14,164,623)(6,497,484)
27,920,350*121,422,866

8,000,000(7,100,000)
29,800,000(5,000,000)
8,000,000(2,000,000)(55,408)
33,209,706(15,593,948)
49,260,349(12,372,950)
37,184,716*1
24,811,765

(5) Notes on going concern assumption
Not applicable.

(6) Notes on matters concerning significant accounting policies
1.

Method ofdepreciation andamortization of
noncurrent assets(1) Property and equipment (including trust accounts)
Depreciation of property and equipment is calculated using the straight-line method. The useful
lives of major property and equipment components are as follows:
Machinery and equipment
Tools, furniture and fixtures

2 to 17 years
2 to 20 years

Buildings in trust
Structures in trust

2 to 64 years
2 to 64 years

Machinery and equipment in trust
Tools, furniture and fixtures in trust

3 to 32 years
2 to 27 years(2) Intangible assets
Intangible assets are amortized using the straight-line method. The amortization period of major
intangible assets is as follows.
Software (for internal use)

5 years as internally usable years

Fixed-term leasehold rights in trust is amortized using the straight-line method based on remaining
period (41 years and 49 years) of the contract.
(3) Long-term prepaid expenses
Long-term prepaid expenses are amortized using the straight-line method.
2.

Accounting fordeferred assets(1) Investment unit issuance costs
Investment unit issuance costs are amortized using the straight-line method over three years.
(2) Investment corporation bond issuance costs
Investment corporation bond issuance costs are amortized using the interest method over therespective term of the bond.

3.

Standards forrecognition ofTreatment of property taxes and other taxes
For taxes imposed on properties, etc. under management such as property taxes, city planning taxes, andrevenues andexpensesdepreciable asset taxes, the imposed amounts are allocated to the midterm period and expensed as “Realestate operating costs.”
Cash paid for property taxes and city planning taxes, etc. to the transferor of real properties, etc. atacquisition is not recorded as “Real estate operating costs” but capitalized as part of the acquisition costof the relevant property.
The amount of such taxes capitalized in the acquisition cost of real properties was none for the previous
midterm period and ¥241,920 thousand for the midterm period under review.

－

26 －

4.

Method of(1) Method of hedge accounting

hedge accounting

Deferred hedge accounting is applied(2) Hedging instruments and hedged items
Hedging instruments
Interest rate swaps
Hedged items
Interest rates on loans payable(3) Hedging policy
JHR enters into certain derivative transactions in accordance with its financial policy in order tomanage risks, which is provided in the Articles of Incorporation.
(4) Method for assessing hedge effectiveness
JHR evaluates hedge effectiveness by comparing the cumulative changes in cash flow of hedging
instruments and the hedged items and assessing the ratio between the changes.

5.

Scope of funds

Cash and cash equivalents in the semi-annual statements of cash flows consist of cash on hand, cash in(cash and cash
equivalents) intrust accounts, bank deposit and trust deposit, which can be withdrawn at any time, and short-term
investments with a maturity of three months or less when purchased, which can easily be converted tothe semi-annual
statements ofcash and subject to minimal risk of change in value.

cash flows
6.

Other

(1) Accounting treatment of beneficial interests in trust with real estate, etc. as their assets

significant mattersserving as the basis

For trust beneficial interests in real estate, etc., all assets and liabilities held in trust accounts as well
as all income generated and expenses incurred from assets in trust are presented in thefor preparing
semi-annual

accompanying semi-annual balance sheet and income statement accounts accordingly.
The following material items of the trust accounts recorded in the relevant accounts are presented

financial statements

separately on the semi-annual balance sheets.
(a) Cash and deposits in trust(b) Buildings in trust; Structures in trust; Machinery and equipment in trust; Tools, furniture andfixtures in trust; Land in trust; Construction in progress in trust(c) Leasehold rights in trust; Fixed-term leasehold rights in trust; Leasehold and security deposits
in trust(d) Tenant leasehold and security deposits in trust(2) Accounting treatment of consumption taxes
Consumption taxes are excluded from the transaction amounts.

(7) Note on change in the indication method
By applying “Partial Amendments to ‘Accounting Standard for Tax Effect Accounting’” (ASBJ Statement No. 28, February 16,2018) from the beginning of the fiscal year under review, the indication method has been changed to indicate deferred tax
assets under investments and other assets and deferred tax liabilities under long-term liabilities.
As a result, deferred tax liabilities (¥583 thousand) indicated under current liabilities in the previous fiscal year is included indeferred tax liabilities (¥14,838 thousand) under long-term liabilities.

(8) Notes to semi-annual financial statements
Disclosure of notes on “securities” and “share of (profit) loss of entities accounted for using equity method” is omitted because
there is thought to be no longer necessary for disclosure in the midterm financial report.

－

27 －

[Notes to semi-annual balance sheets]*1. Accumulated advanced depreciation of property and equipment deducted from acquisition costs due to government
subsidies received, etc.
As ofDecember 31, 2018
Buildings in trust

As ofJune 30, 2019¥24,921 thousand¥24,921 thousand*2. Matters concerning provision and reversal of reserve for temporary difference adjustment
As of December 31, 2018
(thousands of yen)

Dividend
reserveAmount ofBalance at

Amount ofAmount ofBalance atinitialaccrualbeginning of
periodprovision
during period

reversalduring period

end ofperiod13,127,153

13,127,153－

769,508

12,357,644

Grounds forprovision and reversal

Allocation for dividend(Note)(Note) Reserve for temporary difference adjustment indicates the remaining balance of the amount subdivided into gain on negative goodwill which wasrecorded as a dividend reserve before the fiscal year ended December, 2016, and is scheduled for reversal every fiscal year, starting from the fiscal year
following the fiscal year in which the reserve was made, in an amount that shall be no less than that in equal amounts every fiscal year over a period of no
more than 50 years.

As of June 30, 2019
(thousands of yen)

Dividend
reserveAmount ofinitialBalance at
beginning ofAmount ofprovision

Amount ofreversal

Balance at
end ofaccrualperiodduring period

during period

period13,127,153

12,357,644－

563,572

11,794,071

Grounds forprovision and reversal

Allocation for dividend(Note)(Note) Reserve for temporary difference adjustment indicates the remaining balance of the amount subdivided into gain on negative goodwill which wasrecorded as a dividend reserve before the fiscal year ended December, 2016, and is scheduled for reversal every fiscal year, starting from the fiscal year
following the fiscal year in which the reserve was made, in an amount that shall be no less than that in equal amounts every fiscal year over a period of no
more than 50 years.

*3. Minimum net assets as required by Article 67, paragraph 4 of the Investment Trusts Act
As ofDecember 31, 2018
¥50,000 thousand

－

28 －

As of
June 30, 2019
¥50,000 thousand

[Notes to semi-annual statements of income]*1. Components of real estate operating revenue and real estate operating costs(thousands of yen)
For the six months ended
June 30, 2018
A.

For the six months ended
June 30, 2019

Real estate operating revenue
Real estate operating revenue
Fixed rent
Variable rent

6,858,614
3,636,962

7,537,244
3,436,291

Income from management contracts

1,254,114

1,169,847

11,749,691

12,143,382

Parking lots
Other incidental revenue

81,65931,67680,03633,454

Utilities
Other

387,11270,964

396,928
65,844571,413576,264

12,321,105

12,719,646

Real estate operating costs
Land lease and other rent expenses

455,425450,856

Property taxes
Outsourcing expenses (Note)

802,682
303,715827,699285,627

Nonlife insurance
Depreciation and amortization

23,8462,031,821

24,5892,165,386

Loss on retirement of noncurrent assets
Repairs

11,701
23,654

218,928
13,838

Utilities
Trust fees

391,397
21,836

406,847
21,863

4,981

9,787

4,071,061

4,425,425

8,250,043

8,294,221

Total
Other real estate operating revenue

Total
Total real estate operating revenue
B.

Real estate operating costs

Other
Total real estate operating costs
C.

Net real estate operating income(A − B)(Note) Outsourcing expenses include management contract fees of ¥116,346 thousand for the six months ended June 30, 2018 and ¥107,495 thousand for the six
months ended June 30, 2019.

[Notes to semi-annual statements of changes in net assets]
For the six months ended
June 30, 2018

For the six months ended
June 30, 2019

*1 Total number of investment units
authorized, and issued and outstanding
Total number of investment units authorized

20,000,000 units

20,000,000 units

Total number of investment units issued and outstanding

4,010,847 units

4,462,347 units[Notes to semi-annual statements of cash flows]*1. Relation of balance of cash and cash equivalents at end of period and the amount in semi-annual balance sheet accounts
For the six months ended
June 30, 2018

For the six months ended
June 30, 2019

Cash and deposits¥11,011,580 thousand¥13,751,181 thousand

Cash and deposits in trust¥10,411,285 thousand¥11,060,584 thousand

Cash and cash equivalents¥21,422,866 thousand¥24,811,765 thousand

－

29 －

[Notes on lease transactions]Operating leases (as lessor)
Minimum rental revenue under non-cancellable operating leases
As ofDecember 31, 2018

As ofJune 30, 2019

Due within one year

¥1,666,631 thousand¥1,592,912 thousand

Due after one year

¥3,562,086 thousand¥2,801,851 thousand

Total¥5,228,717 thousand¥4,394,764 thousand[Notes on financial instruments]
Matters concerning fair value of financial instruments
Carrying amounts of financial instruments on the (semi-annual) balance sheets, their fair values, and the differences were as
follows. Financial instruments whose fair values are considered extremely difficult to measure are not included in the table.
See Note 2 below.
As of December 31, 2018
Carrying amount(JPY 1,000)

Fair value(JPY 1,000)

Difference(JPY 1,000)(1) Cash and deposits

25,706,559

25,706,559－(2) Cash and deposits in trust

11,478,156

11,478,156－(3) Operating accounts receivable

2,474,121

2,474,121－

Total assets

39,658,838

39,658,838

－

－

－

－

2,000,000

2,002,200

2,200(6) Current portion of long-term loans payable

11,117,000

11,117,000－(7) Investment corporation bonds

31,600,000

31,785,870

185,870(8) Long-term loans payable

91,954,000

91,954,000－

Total liabilities

136,671,000

136,859,070

188,070(484,593)(484,593)－(4) Short-term loans payable(5) Current portion of investment corporation bonds
payable(9) Derivative transactions (*)

－

30 －

As of June 30, 2019
Carrying amount(JPY 1,000)

Fair value(JPY 1,000)

Difference(JPY 1,000)(1) Cash and deposits

13,751,181

13,751,181－(2) Cash and deposits in trust

11,060,584

11,060,584－(3) Operating accounts receivable

1,795,082

1,795,082－

Total assets

26,606,848

26,606,848－

900,000

900,000

－

－

－

－

(6) Current portion of long-term loans payable

13,709,000

13,709,000－(7) Investment corporation bonds

39,600,000

39,892,390

292,390(8) Long-term loans payable

114,162,000

114,162,000－

Total liabilities

168,371,000

168,663,390

292,390(4) Short-term loans payable(5) Current portion of investment corporation bonds
payable－(9) Derivative transactions (*)(985,882)(985,882)(*) Receivables and payables arising from derivative transactions are presented on a net basis and amounts in parenthesis denote net
payables.
(Note 1) Methods to measure fair value of financial instruments, and derivative transactions(1) Cash and deposits; (2) Cash and deposits in trust; (3) Operating accounts receivable; (4) Short-term loans payable
The carrying value is deemed to approximate the fair value since the instruments are scheduled to be settled in a short periodof time.
(5) Current portion of investment corporation bonds payable; (7) Investment corporation bonds
The fair value of these instruments is measured based on the market price.
(6) Current portion of long-term loans payable; (8) Long-term loans payable
The carrying value is deemed to approximate the fair value since the interest rate on long-term loans payable are floatinginterest rates which are revised periodically to reflect market interest rates.
(9) Derivative transactions
The information on the fair value of derivative transactions is presented in “Notes on derivative transactions” below.
(Note 2) Carrying amount of financial instruments whose fair values are considered extremely difficult to measure(thousands of yen)
As ofDecember 31, 2018

Classification

As ofJune 30, 2019

Tenant leasehold and security deposits

1,041,016

1,040,520

Tenant leasehold and security deposits in trust

4,593,946

4,677,460

Total

5,634,962
5,717,980
Tenant leasehold and security deposits / Tenant leasehold and security deposits in trust
Tenant leasehold and security deposits (in trust) are not subject to fair value disclosure because they have no market priceand their actual deposit periods from a tenant’s move-in to move-out are not estimable, thus making a reasonable estimate of
future cash flows is difficult.

－

31 －

[Notes on derivative transactions]
1. Derivative transactions to which hedge accounting is not applied
As of December 31, 2018
For derivative transactions which hedge accounting is not applied, the contract amount or the amount equivalent to theprincipal provided in the contract, etc. as of the account closing date was as follows:(thousands of yen)Classification

Type, etc. of
derivative transaction

Transactions
other thanmarkettransactions

Interest rate swaps(fixed rate payment,
floating rate receipt)

Contract amount, etc.
Of which, due
after one year
6,088,000

3,494,000

Fair value

Method to measure the fair value

The fair value is measured at the(37,996) quoted price, etc. obtained from thecounterparty financial institutions.

As of June 30, 2019
For derivative transactions which hedge accounting is not applied, the contract amount or the amount equivalent to theprincipal provided in the contract, etc. as of the account closing date was as follows:(thousands of yen)Classification

Type, etc. of
derivative transaction

Transactions
other thanmarkettransactions

Interest rate swaps(fixed rate payment,
floating rate receipt)

Contract amount, etc.
Of which, due
after one year
5,288,000

3,494,000

Fair value

Method to measure the fair value

The fair value is measured at the(45,205) quoted price, etc. obtained from thecounterparty financial institutions.

2. Derivative transactions to which hedge accounting is applied
As of December 31, 2018
For derivative transactions which hedge accounting is applied, the contract amount or the amount equivalent to the principal
provided in the contract, etc. as of the account closing date for each method of hedge accounting was as follows:(thousands of yen)
Method ofhedge
accounting

DeferralmethodType, etc. of
derivative transaction

Interest rate swaps(fixed rate payment,
floating rate receipt)

Contract amount, etc.

Mainhedged item

Of which, due
after one year

Long-termloans payable

90,654,000

81,554,000

Fair value

Method to measure
the fair value

The fair value ismeasured at thequoted price, etc.
(446,597)
obtained from thecounterparty
financial institutions.

As of June 30, 2019
For derivative transactions which hedge accounting is applied, the contract amount or the amount equivalent to the principal
provided in the contract, etc. as of the account closing date for the midterm for each method of hedge accounting was asfollows:(thousands of yen)
Method ofhedge
accounting

DeferralmethodType, etc. of
derivative transaction

Interest rate swaps(fixed rate payment,
floating rate receipt)

Contract amount, etc.

Mainhedged item

Long-termloans payable

Of which, due
after one year

112,054,000

－

32 －

102,354,000

Fair value

Method to measure
the fair value

The fair value ismeasured at thequoted price, etc.
(940,676)
obtained from thecounterparty
financial institutions.

[Notes on asset retirement obligations]
Asset retirement obligations recognized on the (semi-annual) balance sheets
1. Outline of the subject asset retirement obligations
JHR recognizes asset retirement obligations as it is obliged to restore the land of Oriental Hotel Fukuoka Hakata Station,acquired on April 1, 2016, and HOTEL ASCENT FUKUOKA, acquired on August 19, 2016, to the original state inaccordance with the fixed-term leasehold agreement.
2. Calculation method of the subject asset retirement obligations
Calculated the amount of asset retirement obligations estimating that the expected useful life is 34 years and 48 years,
respectively, due to their remaining use period and using the discount rate of 0.484% and 0.394%, respectively.
3. Increase and decrease of the subject asset retirement obligations(thousands of yen)
For the year ended
December 31, 2018
Balance at beginning of period
Increase due to acquisition of property and equipment
Adjustment due to passage of time
Balance at end of period

For the six months ended
June 30, 2019443,577445,622

－

－

2,045

1,027

445,622446,650[Notes on rental properties, etc.]
JHR owns rental properties for hotels to earn lease income and income from management contracts. The carrying amounts,changes in such balances, and fair values of such properties were as follows:(thousands of yen)
For the year ended
December 31, 2018

Use

For the six months ended
June 30, 2019

Carrying amount

Hotel

Balance at beginning of period

317,229,208

306,789,379

Net increase (decrease) during period(10,439,828)

67,589,376

Balance at end of period

306,789,379

374,378,756

437,510,000

522,960,000

Fair value at end of period(Note 1) Decrease during the year ended December 31, 2018, principally represents the sale of R&B Hotel Higashi Nihonbashi for ¥1,483 million, the b akasakamitsuke for ¥6,294 million and the b ochanomizu for ¥2,353 million. Increase during the six months ended June 30, 2019, principally represents theacquisition of Hotel Oriental Express Osaka Shinsaibashi for ¥2,841 million and Hilton Tokyo Odaiba for ¥63,461 million.
(Note 2) Fair value at June 30, 2019 is the appraisal value determined by licensed real estate appraisers from outside.

－

33 －

[Notes on segment and related information]
1. Segment information
The segment information has been omitted because JHR has only one segment, which is the investment and management ofhotel real estate.
2. Related information
For the six months ended June 30, 2018(1) Information about products and services
Information about products and services has been omitted because operating revenue from external customers in asingle product/service category accounted for more than 90% of total operating revenue on the semi-annual statements
of income.
(2) Information about geographical areas(i) Operating revenue
Information about geographical areas has been omitted because operating revenue from external customers in Japanaccounted for more than 90% of total operating revenue on the semi-annual statements of income.
(ii) Property and equipment
Information about property and equipment has been omitted because the amount of property and equipment located inJapan accounted for more than 90% of net property and equipment on the semi-annual balance sheets.
(3) Information about major customers(thousands of yen)
Name of customer

Operating revenue

Name of related segment

Hotel Management Japan Co., Ltd. (Note)

5,602,905

Investment and management of hotel real estate

AAPC Japan K.K.

1,498,974

Investment and management of hotel real estate(Note) Operating revenue includes the operating revenue of customers belonging to the same company group as said customers.

For the six months ended June 30, 2019(1) Information about products and services
Information about products and services has been omitted because operating revenue from external customers in asingle product/service category accounted for more than 90% of total operating revenue on the semi-annual statements
of income.
(2) Information about geographical areas(i) Operating revenue
Information about geographical areas has been omitted because operating revenue from external customers in Japanaccounted for more than 90% of total operating revenue on the semi-annual statements of income.
(ii) Property and equipment
Information about property and equipment has been omitted because the amount of property and equipment located inJapan accounted for more than 90% of net property and equipment on the semi-annual balance sheets.
(3) Information about major customers(thousands of yen)
Name of customer

Operating revenue

Name of related segment

Hotel Management Japan Co., Ltd. (Note)

6,253,233

Investment and management of hotel real estate

AAPC Japan K.K.

1,438,063

Investment and management of hotel real estate(Note) Operating revenue includes the operating revenue of customers belonging to the same company group as said customers.

－

34 －

[Notes on per unit information]
Net assets per unit is as follows:
As of
December 31, 2018
Net assets per unit

As ofJune 30, 2019¥50,705¥50,874

Net income per unit and the basis of computation of net income per unit are as follows:
For the six months ended
June 30, 2018

For the six months ended
June 30, 2019

Net income per unit

¥1,592¥1,441

6,387,162

6,353,516－－

Net income for midterm attributable to common investment units(JPY 1,000)

6,387,162

6,353,516

Average number of investment units during period (units)

4,010,847

4,406,896[Basis of computation]
Net income for midterm (JPY 1,000)
Amount not attributable to common unitholders (JPY 1,000)(Note) Net income per unit for midterm is computed by dividing net income for midterm by the average number of investment units during the midterm period.
Net income per unit for midterm after the adjustment of potentially dilutive units is not presented since there are no potentially dilutive units.

[Notes on significant subsequent events]
Not applicable.

－

35 －

(9) Changes in total number of investment units issued and outstanding
The following is the status of increase (decrease) in the total number of investment units issued and outstanding andunitholders’ capital for past five years through to the end of the midterm period under review.

Date

September 9, 2014
January 27, 2015
February 18, 2015
June 22, 2015
July 23, 2015
January 20, 2016
February 17, 2016
July 27, 2016
August 23, 2016
July 5, 2017
August 2, 2017
January 23, 2019
February 20, 2019
(Note 1)
(Note 2)
(Note 3)(Note 4)(Note 5)(Note 6)(Note 7)(Note 8)(Note 9)(Note 10)(Note 11)

(Note 12)(Note 13)

Total number ofinvestment units
issued and outstanding(Units)Increase
Balance(Decrease)

Capital transaction

Capital increase throughpublic offering of investment units
Capital increase throughpublic offering of investment units
Capital increase throughthird-party allotment of investment units
Capital increase throughpublic offering of investment units
Capital increase throughthird-party allotment of investment units
Capital increase throughpublic offering of investment units
Capital increase throughthird-party allotment of investment units
Capital increase throughpublic offering of investment units
Capital increase throughthird-party allotment of investment units
Capital increase throughpublic offering of investment units
Capital increase throughthird-party allotment of investment units
Capital increase throughpublic offering of investment units
Capital increase throughthird-party allotment of investment units

Unitholders’ capital(JPY1M)
Increase(Decrease)

BalanceNote

170,000

2,791,281

10,17959,024(Note 1)200,000

2,991,281

14,97473,999(Note 2)9,041

3,000,322

676

74,676(Note 3)140,000

3,140,322

10,50085,177(Note 4)

3,905

3,144,227

292

85,470(Note 5)170,000

3,314,227

13,98699,456(Note 6)

7,680

3,321,907

631

100,088(Note 7)428,260

3,750,167

33,813

133,902(Note 8)

11,7403,761,907

926

134,829(Note 9)236,000

3,997,907

17,715

152,544(Note 10)

12,9404,010,847

971

153,516(Note 11)447,800

4,458,647

33,104

186,620(Note 12)3,700

4,462,347

273

186,894(Note 13)

New investment units were issued through public offering with an issue price per unit of ¥61,912 (issue value of ¥59,880) in order to procure funds
for the acquisition of new properties, etc.
New investment units were issued through public offering with an issue price per unit of ¥77,415 (issue value of ¥74,874) in order to procure funds
for the acquisition of new properties, etc.
New investment units were issued through third-party allotment with an issue value per unit of ¥74,874 in order to procure funds for allocation to partof future acquisitions of specified assets, part of other repayment of loans, or capital expenditures to maintain or improve competitiveness of existing
properties.
New investment units were issued through public offering with an issue price per unit of ¥77,512 (issue value of ¥75,007) in order to procure funds
for the acquisition of new properties, etc.
New investment units were issued through third-party allotment with an issue value per unit of ¥75,007 in order to procure funds for allocation to partof future acquisitions of specified assets, part of other repayment of loans, or capital expenditures to maintain or improve competitiveness of existing
properties.
New investment units were issued through public offering with an issue price per unit of ¥85,020 (issue value of ¥82,273) in order to procure funds
for the acquisition of new properties, etc.
New investment units were issued through third-party allotment with an issue value per unit of ¥82,273 in order to procure funds for the acquisitionof new properties, etc.
New investment units were issued through public offering with an issue price per unit of ¥81,536 (issue value of ¥78,956) in order to procure funds
for the acquisition of new properties, etc.
New investment units were issued through third-party allotment with an issue value per unit of ¥78,956 in order to procure funds for allocation to partof future acquisitions of specified assets, part of repayment of loans, or capital expenditures to maintain or improve competitiveness of existing
properties.
New investment units were issued through public offering with an issue price per unit of ¥77,518 (issue value of ¥75,065) in order to procure funds
for the acquisition of new properties, etc.
New investment units were issued through third-party allotment with an issue value per unit of ¥75,065 in order to procure funds for allocation to partof future acquisitions of specified assets, part of repayment of loans, or capital expenditures to maintain or improve competitiveness of existing
properties.
New investment units were issued through public offering with an issue price per unit of ¥76,342 (issue value of ¥73,927) in order to procure funds
for the acquisition of new properties, etc.
New investment units were issued through third-party allotment with an issue value per unit of ¥73,927 in order to procure funds for the acquisitionof new properties, etc..

－

36 －

3. Reference information
For the detail information of the each properties and operating result of hotels, please see reference information below as well as
Financial Results Briefing dated today and the website of JHR (http://www.jhrth.co.jp/en/ir/library.html).

(1) Information on values of assets under management, etc.
A. Investment status
The following outlines the investment status of JHR as of the end of the midterm period under review.
Assetcategory

Hotel type
(Note 1)

Prefectural
location

Osaka

1.4

4,811

1.2

3,557
2,686
2,030
1,766
1,465
1,198
952
779
6,620
5,853
5,178
2,340
2,033
1,437
6,665
2,860
2,165
1,802
119,010
17,79013,253
9,195
3,187

1.0
0.8
0.6
0.5
0.4
0.3
0.3
0.2
1.9
1.7
1.5
0.7
0.6
0.4
1.9
0.8
0.6
0.5
33.9
5.1
3.8
2.6
0.9

3,541
2,673
2,025
1,812
1,464
1,188
946
774
6,593
5,818
5,171
2,332
2,034
1,428
6,661
2,845
2,145
1,797
121,536
63,391
17,633
13,209
9,148
3,168

0.9
0.7
0.5
0.4
0.4
0.3
0.2
0.2
1.6
1.4
1.3
0.6
0.5
0.4
1.6
0.7
0.5
0.4
29.9
15.6
4.3
3.3
2.3
0.8

17,4875.0

17,402

4.3

4,106
15,605
10,442

1.2
4.5
3.0

4,091
15,565
10,396

1.0
3.8
2.6

7,178

2.0

9,726

2.4

9,772
1,642
109,661

2.8
0.5
31.3

9,676
1,628
175,038

2.4
0.4
43.1

Hotel Nikko Alivila

17,9895.1

17,901

4.4

Okinawa Marriott Resort & Spa
The Beach Tower Okinawa
Chiba
Hilton Tokyo Bay
Osaka
Hotel Keihan Universal City
Kanagawa
Hakone Setsugetsuka
Subtotal
Real estate in trust – Total

14,875
6,677
26,0985,930
3,722
75,295
303,967

4.2
1.9
7.4
1.7
1.1
21.5
86.7

14,767
6,617
26,445
5,925
3,702
75,361
371,936

3.6
1.6
6.5
1.5
0.9
18.6
91.6

Deposits and other assets (Note 8)

46,58913.3

34,082

8.4

Total assets

350,556100.0

406,018

100.0

Limited-service
hotel

Hokkaido

Fukuoka
Kyoto
Okinawa
Kumamoto
Nara
Tokyo
Chiba

Full-service hotel

Holiday Inn Osaka Namba
Namba Oriental Hotel
Hotel Oriental Express Osaka Shinsaibashi
ibis Tokyo Shinjuku
CANDEO HOTELS UENO-KOEN
the b ikebukuro
Sotetsu Fresa Inn ShimbashiKarasumoriguchi (Note 4)
Comfort Hotel Tokyo Higashi Nihombashi
the b hachioji
Smile Hotel Nihombashi Mitsukoshimae
R&B Hotel Ueno Hirokoji
Hotel Vista Kamata Tokyo
the b suidobashi
dormy inn·global cabin Asakusa (Note 5)
Chisun Inn Kamata
ibis Styles Sapporo
Mercure Sapporo
HOTEL ASCENT FUKUOKA
the b hakata
Hakata Nakasu Washington Hotel Plaza
Toyoko Inn Hakata-guchi Ekimae
ibis Styles Kyoto Station
Mercure Okinawa Naha
Dormy Inn Kumamoto
Nara Washington Hotel Plaza
Subtotal
Hilton Tokyo Odaiba
Oriental Hotel tokyo bay
Hilton Tokyo Narita Airport
International Garden Hotel Narita
Hotel Francs
ACTIVE-INTER CITY HIROSHIMA(Sheraton Grand Hiroshima Hotel) (Note 6)
Oriental Hotel Hiroshima
Hilton Nagoya
Hotel Nikko Nara
Oriental Hotel Fukuoka Hakata Station(Note 7)
Kobe Meriken Park Oriental Hotel
Mercure Yokosuka
Subtotal

Hiroshima
Aichi
Nara
Fukuoka
Hyogo
Kanagawa

Okinawa

Resort hotel

Amount(JPY1M)
Total liabilities
Total net assets(Note 1)
(Note 2)As ofJune 30, 2019
Total amount
Ratio toheld
total assets(JPY1M)(%)(Note 2)
(Note 3)
26,995
6.6
14,509
3.6
2,823
0.7
7,905
1.9
6,663
1.6
6,573
1.6

4,821

Tokyo

Real
estate
in
trust

Name

As of
December 31, 2018
Total amount
Ratio toheld
total assets(JPY1M)(%)(Note 2)
(Note 3)27,033
7.7
14,552
4.2
－
－
7,940
2.3
6,681
1.9
6,584
1.9

147,184
203,372

Ratio tototal assets
(%)
42.0
58.0

Amount(JPY1M)
178,997
227,021

Ratio tototal assets
(%)
44.1
55.9

Hotels are categorized as limited-service hotels, full-service hotels or resort hotels according to the manner of operation.
For real estate in trust, “Total amount held” shows the amount calculated by deducting accumulated depreciation from acquisition price (including
expenses incidental to acquisition).

－

37 －

(Note 3)(Note 4)(Note 5)(Note 6)(Note 7)(Note 8)“Ratio to total assets” shows the ratio of total amount of each asset held to total assets, rounded off to one decimal place.
Hotel Sunroute Shinbashi was renamed as Sotetsu Fresa Inn Shimbashi-Karasumoriguchi on April 23, 2019. In this report, the same shall apply
hereinafter.
Dormy Inn EXPRESS Asakusa was renamed as dormy inn·global cabin Asakusa on August 4, 2019. In this report, the same shall apply hereinafter.
ACTIVE-INTER CITY HIROSHIMA is classified in accordance with the business category of Sheraton Grand Hiroshima Hotel, its main facility.
Hotel Centraza Hakata was renamed as Oriental Hotel Fukuoka Hakata Station on April 9, 2019. In this report, the same shall apply hereinafter.
Includes machinery and equipment, tools, furniture and fixtures, construction in progress, construction in progress in trust, and intangible assets(excluding leasehold rights in trust and fixed-term leasehold of land in trust).

－

38 －

B. Assets under management(A) Major issues of investment securities
Not applicable.
(B) Real estate properties under management
Not applicable.
(C) Other major assets under management
A. Summary of real estate properties (in trust) under management
The following summarizes the real estate properties (in trust) under management by JHR as of the end of the midterm period underreview.
a. Details of assets under management (acquisition price, etc.)
PropertyNo.

Name

Acquisition
price(JPY1M)(Note 2)

Grade
(Note 1)

Carrying
amountat end ofperiod(JPY1M)(Note 3)

Appraisalvalue
at end ofperiod(JPY1M)(Note 4)

Investment
ratio
Appraisal(Acquisition
agencyprice)(Note 5)(%)(Note 6)

Collateral(Note 7)

1

Kobe Meriken Park Oriental Hotel

Upper-middle

10,9009,871

16,200N

2.9

Unsecured

2

Oriental Hotel tokyo bay

Mid-price

19,90017,83934,900N

5.3

Unsecured

3

Namba Oriental Hotel

Mid-price

15,00014,62832,900N

4.0

Unsecured

4

Hotel Nikko Alivila

Luxury18,90018,16732,900N

5.0

Unsecured

5

Oriental Hotel Hiroshima

Upper-middle

4,100

4,164

4,370

N

1.1

Unsecured6

ibis Tokyo Shinjuku

Mid-price

7,243

8,011

10,200N

1.9

Unsecured

8

The Beach Tower Okinawa

Mid-price

7,610

6,622

10,000N

2.0

Unsecured

9

Hakone Setsugetsuka

Mid-price

4,070

3,710

5,300

N

1.1

Unsecured

10

Dormy Inn Kumamoto

Mid-price

2,334

2,145

3,060

J

0.6

Unsecured

12

the b suidobashi

Mid-price

1,120

1,209

1,940

N

0.3

Unsecured13

dormy inn·global cabin Asakusa

Economy

999

946

1,330

J

0.3

Unsecured

14

Hakata Nakasu Washington Hotel Plaza

Mid-price

2,130

2,034

4,520

N

0.6

Unsecured

15

Nara Washington Hotel Plaza

Mid-price

2,050

1,799

2,440

N

0.5

Unsecured16

R&B Hotel Ueno Hirokoji

Economy

1,720

1,812

2,010

J

0.5

Unsecured

18

Comfort Hotel Tokyo Higashi Nihombashi

Economy

3,746

3,541

5,830

J

1.0

Unsecured

22

Smile Hotel Nihombashi Mitsukoshimae

Economy

2,108

2,025

3,160

J

0.6

Unsecured24

Toyoko Inn Hakata-guchi Ekimae

Economy

1,652

1,428

2,780

T

0.4

Unsecured

25

Hotel Vista Kamata Tokyo

Economy

1,512

1,465

2,040

T

0.4

Unsecured

26

Chisun Inn Kamata

Economy

823

777

1,450

T

0.2

Unsecured

29

Hotel Keihan Universal City

Mid-price

6,000

5,926

13,900R

1.6

Unsecured

30

Sotetsu Fresa Inn ShimbashiKarasumoriguchi

Mid-price

4,800

4,813

8,970

D

1.3

Unsecured

31

Hilton Tokyo Bay

Luxury26,05026,46040,400D

7.0

Unsecured32

ibis Styles Kyoto Station

Mid-price

6,600

6,678

11,600D

1.8

Unsecured33

ibis Styles Sapporo

Mid-price

6,797

6,636

11,200N

1.8

Unsecured34

Mercure Sapporo

Mid-price

6,000

5,888

11,000N

1.6

Unsecured35

Mercure Okinawa Naha

Mid-price

3,000

2,875

7,760

N

0.8

Unsecured37

the b ikebukuro

Mid-price

6,520

6,594

7,350

N

1.7

Unsecured39

the b hachioji

Mid-price

2,610

2,683

2,790

N

0.7

Unsecured40

the b hakata

Mid-price

2,300

2,344

4,710

N

0.6

Unsecured

41

Hotel Francs

Mid-price

3,105

3,168

4,090

D

0.8

Unsecured42

Mercure Yokosuka

Mid-price

1,650

1,663

3,000

D

0.4

Unsecured

43

Okinawa Marriott Resort & Spa

Upper-middle

14,95014,92418,700N

4.0

Unsecured

44

ACTIVE-INTER CITY HIROSHIMA(Sheraton Grand Hiroshima Hotel)

Luxury17,32017,49521,700D

4.6

Unsecured

45

CANDEO HOTELS UENO-KOEN

Mid-price

6,705

6,671

7,630

D

1.8

Unsecured

46

Oriental Hotel Fukuoka Hakata Station(Note 8)Upper-middle

7,197

10,05514,000D

1.9

Unsecured

47

Holiday Inn Osaka Namba

Mid-price

27,00027,134

27,200N

7.2

Unsecured

48

HOTEL ASCENT FUKUOKA

Economy

4,925

5,171

6,630

D

1.3

Unsecured

49

Hilton Nagoya

50

Hilton Tokyo Narita Airport

Luxury15,25015,56516,000D

4.1

Unsecured

Upper-middle

13,175

13,412

13,700N

3.5

Unsecured－

39 －Property
No.

Grade
(Note 1)

Name

51

International Garden Hotel Narita

52

Hotel Nikko Nara

53

Hotel Oriental Express Osaka Shinsaibashi

54

Hilton Tokyo Odaiba(Note 2)

(Note 3)(Note 4)(Note 5)(Note 6)(Note 7)(Note 8)(Note 9)Appraisalvalue
at end ofperiod(JPY1M)(Note 4)

Investment
ratio
Appraisal(Acquisition
agencyprice)(Note 5)(%)(Note 6)

Collateral(Note 7)

Mid-price

9,125

9,210

9,650

N

2.4

Unsecured

Upper-middle

10,373

10,461

11,200D

2.8

UnsecuredMid-price

2,738

2,835

3,050

D

0.7

Unsecured

Upper-middle

62,40063,50569,400N

16.7

Unsecured

374,508374,378

522,960

Total(Note 1)

Carrying
amountat end ofperiod(JPY1M)(Note 3)Acquisition
price(JPY1M)(Note 2)100.0

JHR categorizes hotels into the four grade classes “Luxury,” “Upper-middle,” “Mid-price” and “Economy” mainly from the perspective of average
daily rate, etc.
“Acquisition price” is the acquisition price stated on the purchase and sale agreement for beneficial interest in trust, etc. (consumption tax, local
consumption tax and the acquisition expense such as broker’s fee are not included). The acceptance prices are indicated for the properties that havebeen accepted through the Merger.
“Carrying amount at end of period” is the book value at the end of the midterm period under review, and includes not only the amounts for real estatein trust, but also for machinery and equipment, tools, furniture and fixtures, construction in progress, construction in progress in trust and intangible
assets.
“Appraisal value at end of period” is the appraisal value at the end of the midterm period under review as the date of appraisal, in accordance with theasset valuation methods and standards provided in JHR’s Articles of Incorporation and the regulations set forth by The Investment Trusts Association,
Japan.
Under “Appraisal agency,” the letters indicate the appraisers for the properties as follows:N:
Nihon Fudosan Kenkyusho (Japan Real Estate Institute)J:
JLL Morii Valuation & Advisory K.K.
T:
The Tanizawa Sōgō Appraisal Co., Ltd.
R:
Rich Appraisal Institute Co., Ltd.
D:DAIWA REAL ESTATE APPRAISAL CO., LTD.
“Investment ratio” is the ratio of acquisition price of the respective asset held at the end of the midterm period under review to the total amount ofacquisition price of all assets held at the end of the midterm period under review, rounded off to one decimal place.
“Collateral” is whether or not a pledge has been established for the beneficial interest in trust.
The grade for Oriental Hotel Fukuoka Hakata Station was changed from “Mid-price” to “Upper-middle” following the reopening after renovation in
April 2019.
The omitted property numbers are the property numbers of assets that have been transferred.

b. Details of assets under management (change in tenants of portfolio)
The following is the change in total number of tenants, total leasable area, total leased area and occupancy rate, etc. of realestate properties (in trust) under management for the past five years.

Total number oftenants(Note 1)
Total leasable area
(Note 2)
Total leased area
(Note 3)
Occupancy rate
(Note 4)(Note 1)

(Note 2)

(Note 3)(Note 4)End of15th period
December 2014

End of16th period
December 2015

End of17th period
December 2016

End of18th period
December 2017

End of19th period
December 2018

End of midterm periodof 20th period
June 2019

57

113

128

131

126

126

386,826.71 m2

493,758.78 m2

587,481.02 m2

687,124.54 m2

678,714.48 m2

746,329.68 m2

386,447.08 m2

493,138.06 m2

587,050.94 m2

686,694.46 m2

677,863.00 m2

745,389.57 m2

99.9%

99.9%

99.9%

99.9%

99.9%

99.9%

Total number of tenants indicates the total number of tenants based on the lease contracts for respective real estate in trust (excluding tenants ofparking lots, etc.) as of the end of each fiscal period or midterm period. However, for properties for which master lease contracts under the passthrough scheme are concluded in which trustee receives the same amount of rents, etc. from end tenants as is in principle, the total number of end
tenants (excluding tenants of parking lots, etc.) is indicated.
In principle, total leasable area represents leasable area of the building, which does not include leasable area of land (including parking lots on
ground), based on a lease contract or plan for each real estate in trust. For properties in which the leased area is not described in the lease contract,leasable area represents the area described in the registration of the building. Furthermore, when the leasable area in the lease contract is indicated intsubo units, the figure in the table has been converted to the area in metric units (3.30578 square meters per one tsubo). The same shall apply
hereinafter.
In principle, total leased area represents the leased area described in the lease contract of the building. For properties in which the leased area is notdescribed in the lease contract, leased area shows the area described in the registration of the building. Furthermore, when the leased area in the lease
contract is indicated in tsubo units, the figure in the table has been converted to the area in metric units (3.30578 square meters per one tsubo).
However, for properties for which master lease contracts under the pass-through scheme are concluded in which trustee receives the same amount ofrents, etc. with rents, etc. from end tenants as is in principle, the total area for which lease contracts have been concluded with end tenants and which
are actually leased is indicated. The same shall apply hereinafter.
Occupancy rate indicates the percentage of leased area to leasable area of respective real estate properties in trust as of the end of each fiscal period or
midterm period. The same shall apply hereinafter.

－

40 －

c. Details of assets under management (information on major real estate)
Major real estate of which total annual rent accounts for 10% or more of the total annual rent (Note 1) of the entire portfolio is
as follows.

Property name

Hilton Tokyo Odaiba

Total number oftenants1

Total annual rent

Fixed rent
¥3,100
millionTotal leased area

64,907.76 m2

Total leasable
area

64,907.76 m2

Variable rent
- (Note 1)

Change in occupancy rate
for the past five years (Note 2)
December 2014

100.0%

December 2015

100.0%

December 2016

100.0%

December 2017100.0%

December 2018

100.0%

June 2019100.0%(Note 1) “Total annual rent” is the amount of (i) the amount arrived at when monthly fixed rent (rent of the building itself only,
excluding common area maintenance charges and signage and parking usage fees; not factoring in any change in rent during
the fiscal year) in lease contracts at the end of the midterm period under review is multiplied by 12, plus (ii) assumed
amounts of revenue sharing, variable rent or income from management contracts for full year. The assumed full-year
amounts of variable rent of the two properties acquired during the fiscal year ending December 2019 (Hotel Oriental Express
Osaka Shinsaibashi and Hilton Tokyo Odaiba) are rationally calculated assuming that they were held throughout the fiscal
year, and variable rent for Hilton Tokyo Odaiba is not expected for the fiscal year ending December 2019 (20th period).
(Note 2)

Occupancy rates prior to December 2018 are figures provided by the seller.

－

41 －

d. Details of assets under management (NOI, etc.)

1

Kobe Meriken Park Oriental Hotel

Variable/Fixed

Real estate
operating revenue(JPY 1,000)
504,988

2

Oriental Hotel tokyo bay

Variable/Fixed

916,509857,463641,508

3

Namba Oriental Hotel

Variable/Fixed

742,215

690,136

610,772

4

Hotel Nikko Alivila

Variable/Fixed

589,764

515,796

359,058

5

Oriental Hotel Hiroshima

Variable/Fixed

218,792

196,652

153,415

6

ibis Tokyo Shinjuku

Management contract

329,048

232,130

176,362

8

The Beach Tower Okinawa

Fixed

255,524

234,229

168,256

9

Hakone Setsugetsuka

Fixed147,482

135,741

89,552

10

Dormy Inn Kumamoto

Fixed

97,23086,72965,39412

the b suidobashi

Variable/Fixed

52,361

45,62831,88013

dormy inn·global cabin Asakusa

Fixed

31,997

27,61820,875

14

Hakata Nakasu Washington Hotel Plaza (Note 4)

Fixed

120,000

112,000

99,00015

Nara Washington Hotel Plaza (Note 4)

Fixed

75,00066,00049,000

16

R&B Hotel Ueno Hirokoji

48,646

41,50633,35718

Comfort Hotel Tokyo Higashi Nihombashi

152,351

136,978

118,862

22

Smile Hotel Nihombashi Mitsukoshimae

87,423

79,682

69,48324

Toyoko Inn Hakata-guchi Ekimae

70,51963,88754,77725

Hotel Vista Kamata Tokyo

46,86739,71027,27226

Chisun Inn Kamata

41,54138,06032,44329

Hotel Keihan Universal City

457,124

419,574

376,957

30

Sotetsu Fresa Inn Shimbashi-Karasumoriguchi

279,734

248,202237,326

31

Hilton Tokyo Bay

989,059

846,589763,274

32

ibis Styles Kyoto Station

Fixed
Variable/Fixed(Note 5)
Variable/Fixed(Note 5)
Fixed
Variable/Fixed(Note 5)
Variable
Variable/Fixed(Note 5)
Variable/Fixed(Note 5)
Variable/Fixed(Note 5)
Management contract

33

ibis Styles Sapporo

Management contract

PropertyNo.

Name

Rent type(Note 1)

NOI
(Note 2)(JPY 1,000)
379,913

NOI after depreciation(Note 3)
(JPY 1,000)
216,016

236,489

213,830

195,785

289,026

225,463

184,453

34

Mercure Sapporo

Management contract

370,423265,809220,68035

Mercure Okinawa NahaManagement contract

172,205

135,954

107,235

37

the b ikebukuro

Variable/Fixed

182,222

169,494

152,843

39

the b hachioji

Variable/Fixed

94,68582,64367,41340

the b hakata

Variable/Fixed

120,631

114,519

103,841

41

Hotel Francs

Fixed

150,000

117,91396,70942

Mercure Yokosuka

Variable

200,934

145,652

126,507

43

Variable/Fixed

300,619

258,432

121,724

Variable/Fixed

780,667

561,725

460,672

45

Okinawa Marriott Resort & Spa
ACTIVE-INTER CITY HIROSHIMA(Sheraton Grand Hiroshima Hotel)
CANDEO HOTELS UENO-KOEN

Fixed

174,989

161,831

141,877

46

Oriental Hotel Fukuoka Hakata Station (Note 6)

Variable/Fixed

199,999

77,322(268,084)

47

Holiday Inn Osaka Namba

Variable/Fixed

515,258

491,559

413,899

48

HOTEL ASCENT FUKUOKA

Fixed

216,587

145,991

127,579

49

Hilton Nagoya

Variable

695,425

342,754

266,44050

Hilton Tokyo Narita Airport

Variable/Fixed

407,814365,072

270,507

51

International Garden Hotel Narita

Variable/Fixed

309,065

286,897219,21652

Hotel Nikko Nara
Hotel Oriental Express Osaka Shinsaibashi(Note 7)
Hilton Tokyo Odaiba (Note 8)

Variable/Fixed

284,853

260,930

193,209

44

53
54

Variable/Fixed

47,73546,32440,982

Variable/Fixed

714,630

713,404

654,448

12,719,646

10,679,564

8,294,221

Total(Note 1)
(Note 2)
(Note 3)(Note 4)

Under “Rent type,” “Fixed” is a property under a fixed rent structure, “Variable” is a property under a variable rent structure, “Management contract”
is a property under a management contract structure, and “Variable/Fixed” is a property under a combination of fixed and variable rent structures.
NOI = Real estate operating revenue − Real estate operating costs + Depreciation + Loss on retirement of noncurrent assets + Asset retirement
obligations expenses
NOI after depreciation (net real estate operating income) = Real estate operating revenue − Real estate operating costs
For Hakata Nakasu Washington Hotel Plaza and Nara Washington Hotel Plaza, consent on disclosure of rent in units of thousand yen has not beenobtained from the lessees and numbers are thus rounded down to the nearest million yen.

－

42 －

(Note 5)(Note 6)(Note 7)(Note 8)(Note 9)For Comfort Hotel Tokyo Higashi Nihombashi, Smile Hotel Nihombashi Mitsukoshimae, Hotel Vista Kamata Tokyo, Hotel Keihan Universal City,
Sotetsu Fresa Inn Shimbashi-Karasumoriguchi and Hilton Tokyo Bay, the rent structure is one that has set not only fixed rent, but also partly has rent
based on a revenue sharing structure.
Oriental Hotel Fukuoka Hakata Station (formerly Hotel Centraza Hakata) underwent major renovation work suspending its hotel operation from
October 1, 2018 through the reopening on April 9, 2019.
Hotel Oriental Express Osaka Shinsaibashi was acquired on February 1, 2019.
Hilton Tokyo Odaiba was acquired on April 8, 2019.
The property numbers of assets that were transferred before the end of the previous fiscal year are intentionally omitted.

－

43 －

B. Income statements for individual real estate properties (in trust) under management
The following are the individual income statements for real estate properties (in trust) under management for the midterm
period under review (from January 1, 2019 to June 30, 2019). Figures are rounded down to the nearest thousand yen in
principle, but are otherwise noted if circumstances do not allow for the figures to be stated in units of thousand yen.
Property No.

-

Property name

Portfolio total(Note 1)

1
Kobe
Meriken Park
Oriental Hotel

2

3

4

5

Oriental Hoteltokyo bay

Namba
Oriental Hotel

Hotel Nikko
AlivilaOriental Hotel
Hiroshima

Number of operating days

-

181

181

181

181

181

(A) Real estate operating revenue subtotal

12,719,646

504,988916,509742,215589,764

218,792

Fixed rent

7,537,244

322,950

315,799

398,950

402,049

170,752

Variable rent

4,606,138

180,745

600,709343,265

187,71448,040

Other revenue

576,264

1,293

-

-

-

-

(B) Real estate operating costs subtotal

4,425,425

288,971275,000

131,442

230,705

65,376

Land lease and other rent expenses

450,856

96,349--42,074-

Property taxes

827,699

26,09656,45750,37028,66920,623

Outsourcing expenses

285,627

480

480

480

960

480

Nonlife insurance

24,589

1,606

1,601

721

1,247

530

Depreciation and amortization

2,165,386

162,410204,304

79,345

153,717

43,160Loss on retirement of noncurrent assets

218,928

1,485

11,650

18

3,021

77

Other costs

452,336

543

506

506

1,015

505

(C) Net real estate operating income = (A) − (B)8,294,221

216,016

641,508

610,772

359,058

153,415(Reference) Occupancy rate

99.9%

100.0%

100.0%

100.0%

100.0%

100.0%(Reference) Number of tenants

126

1

1

1

1

1

Property No.

6

8

ibis
The Beach Tower
Tokyo Shinjuku
Okinawa(Note 1)

Property name

9

10

12

13

HakoneSetsugetsuka

Dormy Inn
Kumamoto

the bsuidobashi

dormy inn·global
cabin Asakusa

Number of operating days

181

181

181

181

181

181

(A) Real estate operating revenue subtotal

329,048

255,524

147,482

97,23052,361

31,997

Fixed rent

51,889255,504

147,169

97,23042,49931,697

Variable rent

246,476

-

-

-

9,861

-

Other revenue

30,682

20

312

-

-

300

(B) Real estate operating costs subtotal

152,685

87,26757,92931,835

20,481

11,121

Land lease and other rent expenses

-

-

-

-

-

-

Property taxes

17,81819,721

11,013

9,575

4,080

3,044

Outsourcing expenses

46,995

-

-

-

600

600

Nonlife insurance

289

553

322

213

92

54

Depreciation and amortization

55,76765,973

46,18821,335

13,748

6,743

Loss on retirement of noncurrent assets

-

-

-

-

-

-

Other costs

31,814

1,020

405

710

1,960

680

(C) Net real estate operating income = (A) − (B)176,362

168,256

89,55265,39431,88020,875(Reference) Occupancy rate

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%(Reference) Number of tenants

4

1

1

1

1

1

－

44 －

Property No.

14

15

Hakata Nakasu
Washington Hotel
Property name
Plaza
(Note 2)
Number of operating days
181

Nara
Washington
Hotel Plaza(Note 2)
181

16

18

22

24

R&B Hotel
Ueno
Hirokoji

Comfort HotelTokyo Higashi
Nihombashi

Smile Hotel
Nihombashi
Mitsukoshimae

Toyoko Inn
Hakata-guchi
Ekimae

181

181

181

181

(A) Real estate operating revenue subtotal

120,000

75,00048,646

152,351

87,42370,519Fixed rent

120,000

73,00048,252

129,860

67,20070,519Variable rent

-

-

-

16,887

20,223-

Other revenue

0

2,000

394

5,602

-

-

(B) Real estate operating costs subtotal

20,00025,00015,28933,48817,93915,741

Land lease and other rent expenses

-

-

-

-

-

-

Property taxes

6,000

5,000

6,116

13,405

6,429

5,349

Outsourcing expenses

0

1,000

420

807

600

540

Nonlife insurance

0

0

84

209

93

119

Depreciation and amortization

13,00017,0008,149

18,115

10,1989,109

Loss on retirement of noncurrent assets

0

-

-

-

-

-

Other costs

0

0

518

950

617

622

(C) Net real estate operating income = (A) − (B)99,00049,00033,357

118,862

69,48354,777(Reference) Occupancy rate

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%(Reference) Number of tenants

1

2

1

2

1

1

Property No.

25

26

29

30

31

32

Property name

Hotel Vista
Kamata Tokyo

Chisun Inn
KamataHotel Keihan
Universal City

Sotetsu Fresa Inn
ShimbashiKarasumoriguchi

HiltonTokyo Bay

ibis Styles
Kyoto Station(Note 1)

Number of operating days

181

181

181

181

181

181

(A) Real estate operating revenue subtotal

46,86741,541

279,734

46,767-

Variable rent-

41,541Other revenue

100-

16,319989,059
Undisclosed(Note 3)
Undisclosed(Note 3)
Undisclosed(Note 3)

236,489

Fixed rent

457,124
Undisclosed(Note 3)
Undisclosed(Note 3)
Undisclosed(Note 3)(B) Real estate operating costs subtotal

19,594

9,097

80,16642,408

225,784

40,704

Land lease and other rent expenses--

10,555-65,417-

Property taxes

5,928

2,374

22,57012,92068,707

9,784

Outsourcing expenses

600

540

2,626

2,355

5,400

12,248149,002
114,412

21,167
213,522
1,800

Nonlife insurance

107

47

645

173

1,565

202

Depreciation and amortization

12,4385,616

42,616

10,876

83,31418,045

Loss on retirement of noncurrent assets

-

-

-

-

-

-

Other costs

519

519

1,152

16,083

1,379423(C) Net real estate operating income = (A) − (B)27,27232,443376,957

237,326

763,274

195,785(Reference) Occupancy rate

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%(Reference) Number of tenants

1

1

1

4

1

2

－

45 －

Property No.

33

34

35

37

39

40

Property name

ibis Styles
Sapporo(Note 1)

MercureSapporo(Note 1)

MercureOkinawa Naha
(Note 1)the bikebukuro

the bhachioji

the bhakataNumber of operating days

181

181

181

181

181

181

(A) Real estate operating revenue subtotal

289,026

370,423

172,205

182,222

94,685

120,631

Fixed rent

10,64533,025-

110,719

58,91344,761

Variable rent

256,916

282,417

170,71770,43432,46475,870

Other revenue

21,46354,980

1,488

1,068

3,308

-

(B) Real estate operating costs subtotal

104,572

149,742

64,96929,37827,272

16,790Land lease and other rent expenses

-

-

156

-

-

-

Property taxes

18,43324,567

11,54910,655

10,6644,796

Outsourcing expenses

23,88633,06422,473

600

600

600

Nonlife insurance

410

491

318

198

215

126

Depreciation and amortization

41,00945,12828,71816,651

15,22910,677

Loss on retirement of noncurrent assets

-

-

-

-

-

-

Other costs

20,832

46,491

1,752

1,273

562

589

(C) Net real estate operating income = (A) − (B)184,453

220,680

107,235

152,843

67,413103,841(Reference) Occupancy rate

98.3%

98.1%

100.0%

100.0%

100.0%

100.0%(Reference) Number of tenants

4

14

1

4

11

2

Property No.

41

42

43

44

Property name

Hotel Francs

MercureYokosuka

Okinawa Marriott
Resort & Spa

45

46

ACTIVE-INTERCANDEO
Oriental Hotel
HOTELS UENO- Fukuoka Hakata
CITY
KOEN
HIROSHIMA
Station (Note 4)

Number of operating days

181

181

181

181

181

181

(A) Real estate operating revenue subtotal

150,000

200,934

300,619780,667

199,999

Fixed rent

150,000-

274,999

404,120

174,989
Undisclosed(Note 3)

Variable rent-

178,658

25,619238,515-

Other revenue-

22,276-

138,031

Undisclosed(Note 3)(B) Real estate operating costs subtotal

53,29074,426

178,895

319,994

33,112

468,084

Land lease and other rent expenses

-

-

-

-

-

111,103

Property taxes

29,27917,61139,30359,003

11,5189,095

Outsourcing expenses

900

10,116

1,200

46,810600

1,500

Nonlife insurance

455

851

1,153

1,661

235

553

Depreciation and amortization

21,204

19,144

136,708

101,052

19,954142,028

Loss on retirement of noncurrent assets

-

-

-

-

-

202,575

Other costs

1,450

26,703

530

111,466

804

1,228

(C) Net real estate operating income = (A) − (B)96,709126,507

121,724

460,672

141,877(268,084)(Reference) Occupancy rate

100.0%

100.0%

100.0%

99.6%

100.0%

100.0%(Reference) Number of tenants

1

1

1

38

1

1

－

46 －

199,999-

Property No.

47

48

49

50

51

52

Property name

Holiday Inn
Osaka Namba

HOTEL
ASCENTFUKUOKA

Hilton Nagoya

Hilton Tokyo
Narita Airport

International
Garden Hotel
NaritaHotel Nikko Nara

Number of operating days

181

181

181

181

181

181

(A) Real estate operating revenue subtotal

515,258

216,587

407,814309,065284,853

Fixed rent

288,000

160,364

222,000

168,000

210,000

Variable rent

227,258-

185,814141,065

74,853

Other revenue-

56,222

695,425
Undisclosed(Note 3)
Undisclosed(Note 3)
Undisclosed(Note 3)---(B) Real estate operating costs subtotal

101,358

89,008428,984

137,307

89,84991,643

Land lease and other rent expenses-

13,999111,200---

Property taxes

21,947

15,791

51,16439,357

19,74920,282

Outsourcing expenses

780

6,588

51,505

1,260

1,140

1,380

Nonlife insurance

550

239

1,617

1,543

700

1,382

Depreciation and amortization

77,66018,18976,313

94,564

67,681

67,720Loss on retirement of noncurrent assets

-

-

-

-

-

-

Other costs

420

34,201

137,183

581

578

877

(C) Net real estate operating income = (A) − (B)413,899

127,579

266,440

270,507219,216

193,209(Reference) Occupancy rate

100.0%

96.8%

100.0%

100.0%

100.0%

100.0%(Reference) Number of tenants

1

5

4

1

1

1

Property No.

53

54

Property name

Hotel Oriental
Express Osaka
Shinsaibashi(Note 5)

Hilton Tokyo
Odaiba(Note 6)

Number of operating days

150

84

(A) Real estate operating revenue subtotal

47,735

714,630

Fixed rent

47,500714,630

Variable rent--

Other revenue

235-(B) Real estate operating costs subtotal

6,752

60,181

Land lease and other rent expenses--

Property taxes--

Outsourcing expenses

900

27

Nonlife insurance

79

1,004

Depreciation and amortization

5,341

58,956

Loss on retirement of noncurrent assets--

Other costs

432

193

(C) Net real estate operating income = (A) − (B)40,982

654,448(Reference) Occupancy rate

100.0%

100.0%(Note 1)
(Note 2)
(Note 3)(Note 4)(Note 5)(Note 6)(Note 7)

(Reference) Number of tenants
11
Variable rent includes income from management contracts. For details of the management contract, please refer to “C. Overview of the hotelbusiness; a. Rent structures of hotels with variable rent, management contract or revenue sharing” on page 48.
Consent on disclosure of rent in units of thousand yen has not been obtained from the lessee and numbers are thus rounded down to the nearest
million yen.
Rent income, etc. is not disclosed as consent on disclosure has not been obtained from the tenant with whom a lease contract has been concluded andthus considered to be a case where disclosure cannot be made due to unavoidable circumstances.
Oriental Hotel Fukuoka Hakata Station (formerly Hotel Centraza Hakata) underwent major renovation work suspending its hotel operation from
October 1, 2018 through the reopening on April 9, 2019.
Hotel Oriental Express Osaka Shinsaibashi was acquired on February 1, 2019.
Hilton Tokyo Odaiba was acquired on April 8, 2019.
The property numbers of assets that were transferred before the end of the previous fiscal year are intentionally omitted.

－

47 －

C. Overview of the hotel businessa. Rent structures of hotels with variable rent, management contract or revenue sharing
Property
Name
No.
1
Kobe Meriken Park Oriental Hotel
2
Oriental Hotel tokyo bay
3Namba Oriental Hotel
4
Hotel Nikko Alivila

The
Existing
HMJ
Group

The
Accor
Group

The
Ishin
Group

Other
hotelswithvariablerentorrevenuesharing

Rent type

Method of calculating variable rent and income from management contracts

Variable/Fixed

5

Oriental Hotel Hiroshima

43

Okinawa Marriott Resort & Spa

Variable/Fixed44

ACTIVE-INTER CITY HIROSHIMA(Sheraton Grand Hiroshima Hotel)

Variable/Fixed(Note 2)

46

Oriental Hotel Fukuoka Hakata Station

Variable/Fixed

47

Holiday Inn Osaka Namba

Variable/Fixed

50

Hilton Tokyo Narita Airport

Variable/Fixed

51

International Garden Hotel Narita

Variable/Fixed

52

Hotel Nikko Nara

Variable/Fixed

53

Hotel Oriental Express Osaka
Shinsaibashi

Variable/Fixed

54

Hilton Tokyo Odaiba

Variable/Fixed

6
32
33
34
35
42
12
37
39
40

ibis Tokyo Shinjuku
ibis Styles Kyoto Station
ibis Styles Sapporo
Mercure Sapporo
Mercure Okinawa Naha
Mercure Yokosuka
the b suidobashi
the b ikebukuro
the b hachioji
the b hakata

18

Comfort Hotel Tokyo Higashi Nihombashi

22

Smile Hotel Nihombashi Mitsukoshimae

25

Hotel Vista Kamata Tokyo

26

Chisun Inn Kamata

29

Hotel Keihan Universal City

30

Sotetsu Fresa Inn ShimbashiKarasumoriguchi

31

Hilton Tokyo Bay

49

Hilton Nagoya

Management
contract(Note 4)
Variable

When total GOP of the Five HMJ hotels exceeds GOP base amount(set at ¥3,351 million / year), the amount arrived at when the amountexceeding GOP base amount is multiplied by 85.0%.
GOP base amount is set individually for each hotel for such purposes as
payment of variable rent from each hotel. The breakdown of GOP baseamount is presented below (Note 1).
When hotel GOP exceeds GOP base amount (set at ¥700 million / year),
the amount arrived at when the amount exceeding GOP base amount ismultiplied by 90.0%
When hotel GOP exceeds GOP base amount (set at ¥468 million / year),
the amount arrived at when the amount exceeding GOP base amount ismultiplied by 82.5%
When hotel GOP exceeds GOP base amount (set at ¥425 million / year),
the amount arrived at when the amount exceeding GOP base amount ismultiplied by 90.0%
When hotel GOP exceeds GOP base amount (set at ¥650 million / year),
the amount arrived at when the amount exceeding GOP base amount ismultiplied by 92.5%
When hotel GOP exceeds GOP base amount (set at ¥550 million / year),
the amount arrived at when the amount exceeding GOP base amount ismultiplied by 86.5%
When hotel GOP exceeds GOP base amount (set at ¥360 million / year),
the amount arrived at when the amount exceeding GOP base amount ismultiplied by 98.0%
When hotel GOP exceeds GOP base amount (set at ¥470 million / year),
the amount arrived at when the amount exceeding GOP base amount ismultiplied by 91.5%
FY2019: When hotel GOP for July 2019 to December 2019 exceeds
GOP base amount (set at ¥64 million / year), the amount arrived at when
the amount exceeding GOP base amount is multiplied by 91.0%
FY2020 and after: When hotel GOP exceeds GOP base amount (set at¥128 million / year), the amount arrived at when the amount exceeding
GOP base amount is multiplied by 91.0%
FY2019: When hotel AGOP (Note 3) exceeds AGOP base amount (set at¥2,450 million / year), the amount arrived at when the amount exceeding
AGOP base amount is multiplied by 30.0%
FY2020 and FY2021: When hotel AGOP exceeds AGOP base amount(set at ¥2,970 million / year), the amount arrived at when the amountexceeding AGOP base amount is multiplied by 30.0%
FY2022 and after: When hotel AGOP exceeds AGOP base amount (set at¥1,660 million / year), the amount arrived at when the amount exceeding
AGOP base amount is multiplied by 98.0%
Amount equivalent to GOP
Amount equivalent to GOP
Amount equivalent to GOP
Amount equivalent to GOP
Amount equivalent to GOP
Amount linked to GOP (Note 5)

Variable/Fixed

Amount linked to GOP (Note 5)

Fixed +
Revenue sharing
Fixed +
Revenue sharing

Amount that is a certain percentage of sales exceeding the threshold(Note 5)
Amount that is a certain percentage of sales exceeding the threshold(Note 5)
When total sales of the hotel from January 1 to December 31 of every
year exceeds ¥270 million, the amount arrived at when the amountexceeding ¥270 million is multiplied by 32.5%
Amount that is the monthly GOP multiplied by 86.0%(¥0 if the amount is below ¥0).
Amount that is a certain percentage of sales exceeding the threshold(Note 5)
Amount that is a certain percentage of sales exceeding the threshold(Note 5)
Amount that is a certain percentage of sales exceeding the threshold(Note 5)
Variable rents linked to hotel sales, etc. (Note 5)

Fixed +
Revenue sharing
Variable
Fixed +
Revenue sharing
Fixed +
Revenue sharing
Fixed +
Revenue sharing
Variable－48 －(Note 1)

Breakdown of the GOP base amount set individually for the Five HMJ hotels

Hotel name
Kobe Meriken Park Oriental Hotel¥599,900 thousand

Oriental Hotel tokyo bay¥693,200 thousand

Namba Oriental Hotel¥832,200 thousand

Hotel Nikko Alivila¥995,700 thousand

Oriental Hotel Hiroshima¥230,000 thousand

Total(Note 2)
(Note 3)(Note 4)(Note 5)

Annual GOP base amount¥3,351,000 thousand

The indicated figures are for Sheraton Grand Hiroshima Hotel, the main facility of ACTIVE-INTER CITY HIROSHIMA.
AGOP (adjusted GOP) is the amount calculated by subtracting certain fees and other items from GOP. The same shall apply hereinafter.
The management contract structure is a structure for hotel real estate owned by JHR in which JHR entrusts an operator to operate the hotel and takes in
the outcome of that business as real estate operating revenue. Specifically, JHR, the owner of the hotel real estate, concludes a management contract with
an operator and entrusts the operator with the tasks necessary to run the hotel business. JHR receives the hotel revenue achieved from the hotel business(operation) by the operator and, at the same time, pays a management fee to the operator. This hotel revenue achieved is recognized as “real estate
operating revenue through management contract” and is equivalent to the rent that is the real estate operating revenue under the leasing structure.
The detailed content of the contract is not disclosed as consent on disclosure has not been obtained from the lessee, etc..

－

49 －

b.

Major indicators of the hotel business
The following tables indicate the figures related to the hotel business of the HMJ Group Hotels for the operating period fromJanuary 1, 2019 through June 30, 2019, based on the data provided by the hotel lessees, etc. While these indicators of thehotels are among the indicators that show the operating status of the rooms departments, please note that they do notnecessarily represent the operating revenue and the ability to bear rent, etc. of the respective hotels, as the room rates andprofit margins, etc. of the respective rooms available for sale are not uniform, among other reasons. As such, the indicators
are no more than the reference figures.
Kobe
Meriken Park
Oriental Hotel
Ratio tototal sales(%)

Oriental Hoteltokyo bay

Namba
Oriental Hotel

Ratio tototal sales(%)

Hotel Nikko Alivila

Ratio tototal sales(%)

Oriental Hotel
Hiroshima

Ratio tototal sales(%)

Ratio tototal sales(%)

The Five HMJ
HotelsTotal/Average
Ratio tototal sales(%)

Occupancy rate

82.6%

－

98.0%

－

95.8%

－

84.1%

－

87.3%

－

90.1%

－

ADR
(Note 1)

18,425－

20,536－

19,707－

24,761

－

9,837

－

19,583－

RevPAR(Note 2)

15,213－

20,118－18,880－20,817

－

8,583

－

17,650－Total sales

2,566

100.0

3,360

100.0

1,344

100.0

2,604

100.0

1,012

100.0

10,886

100.0

Rooms department

878

34.2

1,861

55.4

882

65.6

1,496

57.4

353

34.8

5,469

50.2

Food & beveragedepartment

1,560

60.8

1,162

34.6

65

4.8

871

33.4

628

62.1

4,286

39.4

Tenant department

38

1.5

110

3.3

380

28.3

1

0.0

11

1.1

540

5.0

Other departments(Note 3)

89

3.5

228

6.8

18

1.3

237

9.1

20

2.0

591

5.4

513

20.0

1,053

31.3

820

61.0

719

27.6

172

16.9

3,276

30.1

GOP

Sheraton Grand
Oriental Hotel
Holiday Inn Osaka Hilton Tokyo Narita
Hiroshima Hotel
Fukuoka Hakata
Namba
Airport(Note 4)
Station (Note 5)
Ratio toRatio toRatio toRatio toRatio tototal sales
total sales
total sales
total sales
total sales
(%)
(%)
(%)
(%)
(%)

Okinawa Marriott
Resort & Spa

International
Garden Hotel
NaritaRatio tototal sales(%)

Occupancy rate

82.1%

－

89.4%

－

39.1%

－

93.3%

－

87.9%

－

84.5%

－

ADR
(Note 1)

17,768－20,280－19,385－

17,116－

12,216

－

8,465

－

RevPAR(Note 2)

14,589－18,125

－

7,588

－

15,965－

10,743

－

7,152

－

Total sales

1,618

100.0

1,630

100.0

673

100.0

931

100.0

1,668

100.0

783

100.0

Rooms department

953

58.9

781

47.9

304

45.1

907

97.5

1,066

63.9

599

76.5

Food & beveragedepartment

466

28.8

798

49.0

251

37.3

－

－

551

33.0

178

22.8

Tenant department

27

1.6

－

－

112

16.7

18

2.0

28

1.7

3

0.4

Other departments(Note 3)

172

10.6

51

3.1

6

0.9

5

0.6

23

1.4

3

0.3

378

23.4

516

31.6

131

19.5

571

61.3

490

29.4

324

41.4

GOP

－

50 －

Hotel Nikko Nara

Hotel Oriental
Express Osaka
Shinsaibashi

Ratio tototal sales(%)

Hilton Tokyo Odaiba

Ratio tototal sales(%)

Ratio tototal sales(%)

The HMJ Group
HotelsTotal/Average(Note 6)
Ratio tototal sales(%)

Occupancy rate

77.7%

－

92.3%

－

85.9%

－

85.3%

－

ADR
(Note 1)

12,915

－

9,611

－

29,263－

17,587－

RevPAR(Note 2)

10,040

－

8,868

－

25,135－15,005－

Total sales

1,399

100.0

205

100.0

4,258

100.0

24,050100.0

Rooms department

600

42.9

199

97.2

2,061

48.4

12,93953.8

Food & beveragedepartment

778

55.6

6

2.7

2,043

48.0

9,357

38.9

Tenant department

15

1.1

－

－

97

2.3

840

3.5

Other departments(Note 3)

7

0.5

0

0.1

57

1.3

914

3.8

317

22.6

84

41.2

1,144

26.9

7,231

30.1

GOP

(Note 1) ADR: Represents average daily rate, which is calculated by dividing total rooms revenue for a certain period (including service charges) by the total number ofrooms sold during the period.
Service charges are 10% for Kobe Meriken Park Oriental Hotel, Oriental Hotel tokyo bay, Namba Oriental Hotel, Hotel Nikko Alivila, Oriental Hotel
Hiroshima, Okinawa Marriott Resort & Spa, Sheraton Grand Hiroshima Hotel (ACTIVE-INTER CITY HIROSHIMA), International Garden Hotel Narita,
Hotel Nikko Nara and Oriental Hotel Fukuoka Hakata Station; 12% for Hilton Tokyo Narita Airport; and 13% for Hilton Tokyo Odaiba. Holiday Inn Osaka
Namba and Hotel Oriental Express Osaka Shinsaibashi do not request service charges. The same shall apply hereinafter.
(Note 2)

RevPAR: Represents revenue per available room, which is calculated by dividing total rooms revenue for a certain period (including service charges) by the
total number of rooms available for sale during the period. Revenue per available room equals the product of ADR and occupancy rate. The same shall apply
hereinafter.

(Note 3)Figures for the other departments include sales of the department for sale of goods.

(Note 4)The indicated figures are for Sheraton Grand Hiroshima Hotel, the main facility of ACTIVE-INTER CITY HIROSHIMA.

(Note 5)

Oriental Hotel Fukuoka Hakata Station (formerly Hotel Centraza Hakata) underwent major renovation work suspending its hotel operation from October 1,
2018 through the reopening on April 9, 2019. The occupancy rate is calculated including the suspension period.

(Note 6)

For Total/Average of the HMJ Group Hotels, figures are calculated by JHR as reference since no figures have been provided by the hotel lessees.

(Note 7)The occupancy rate is rounded off to one decimal place, while ADR and RevPAR are rounded off to single units. Sales and GOP are rounded off to the nearest
million yen. For the ratio to total sales, the ratio of sales in each department to total sales is rounded off to one decimal place.

－

51 －

(2) Status of capital expenditures
a. Planned capital expenditures (Note)
The following table shows major estimated capital expenditures items for renovation work during the fiscal year planned asof the end of the midterm period under review. Capital expenditures are expected to total ¥2,440 million for the second half
and, in aggregate with the capital expenditures for the first half, capital expenditures are expected to total ¥6,863 million
for the full year.
Estimated construction costs(JPY 1M)
Name of property, etc.
PurposeScheduled period
Payment Total(Location)
Total
for the amountamountfirst half paid
Hilton Tokyo Bay(Urayasu-shi, Chiba)
Okinawa Marriott Resort & Spa(Nago-shi, Okinawa)

Renewal of disaster prevention
switchboard

From September 2019
to November 2019

33

－

－

Replacement of air-conditioning
facilities for guestrooms

From September 2019
to December 2019

66

－

－

295

4

4

25

－

－

420

4

4

Okinawa Marriott Resort & Spa(Nago-shi, Okinawa)
Hilton Nagoya(Nagoya-shi, Aichi)

From May 2019

Renovation of restaurants

to July 2019

Renewal of water supply piping

From July 2019
to November 2019

Total
(Note)New construction and renewal work include those for buildings, attached facilities, etc. as well as items classified as furniture and fixtures. The
scheduled period of the above planned renovation work and whether the renovation work will be performed may change.

b. Capital expenditures during the period (Note)
Major construction work conducted by JHR during the midterm period under review that represents capital expenditures is
as below. Capital expenditures for the midterm period under review totaled ¥4,423 million, and repair expenses that were
accounted for as expense in the period totaled ¥13 million. In aggregate, ¥4,437 million of construction work was carried out.
Name of property, etc.
Construction costs
Purpose
Period(Location)(JPY 1M)
R&B Hotel Ueno Hirokoji
From January 2019
Renewal of air conditioning units
53(Taito-ku, Tokyo)
to January 2019
Hilton Tokyo Bay(Urayasu-shi, Chiba)

Land preparation for parking lot

From December 2018
to May 2019

Oriental Hotel Fukuoka Hakata
StationMajor renovation works for entire

From October 2018

(Fukuoka-shi, Fukuoka)
Holiday Inn Osaka Namba(Osaka-shi, Osaka)
Hilton Nagoya(Nagoya-shi, Aichi)

3,147

property

to April 2019

Renovation of guest rooms(guestrooms on the 10th and 11th floors)

From May 2019
to May 201972

Renewal of water supply piping

From August 2018
to March 2019

16

Total
(Note)

419

3,708

New construction and renewal work include those for buildings, attached facilities, etc. as well as items classified as furniture and fixtures.

－52 －